Long & Short of Markets: ​Jhunjhunwala on when will Sensex top out; June 16 could be a turning point for Street


The butterfly effect of rising bond yields sent shock waves across the global stock market last week. Inflation, being the villain here, can force central banks globally to raise interest rates which can prove fatal for the bull run. Read about the threat from bonds, Rakesh Jhunjhunwala’s gauge to predict bull market’s demise, his commodity bets and more in this weekend’s edition of ‘Long & Short of Markets’.

When will bulls retreat
In this interview, Rakesh Jhunjhunwala gives two other reasons, apart from interventions by central banks, that can lead to the death of a bull market. Read here for more on Big Bull’s take on the end of a bull run, reasons behind his bullishness on Tata Group stocks and his thoughts on the ongoing commodity boom.
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‘Red’ alert! Bears are here to stay
Bond market has an inverse correlation with the equity market and when the yield rises, equities take a hit. With rising yields and rich valuations, analysts are signalling towards a time bound correction on Dalal Street. Find out what analysts are predictions here.
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All eyes on Fed
With corporate earnings beating Street estimates globally, the focus has turned towards containing inflation rather than growth revival. That brings back our attention to interest rates. This takes us back to the 2013’s episode of ‘taper tantrum’ when Fed’s move to raise rates to curb inflation sent shock waves across the world, especially in emerging markets like India. This time the fate of the bulls will be decided on June 16th. More insights here.
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Butterfly effect
Bond market is much bigger than the equity market and with the two sharing an inverse correlation, a rise in bond yields is one of the biggest threats to the stocks rally. With the recent rise in the US Treasury yields sending stocks into a frenzy, it seems like inflation is going to play a spoilsport in containing the yield rise in US, India and elsewhere too. Read here for more on why bond market is the biggest worry for equity investors.
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Get, set, rally!
Momentum indicator MACD is signalling towards stocks which have lost steam and also those which have just packed up enough steam for their journey upwards. In an ongoing correction, here is a list of smallcap stocks which are set to rally as the MACD crosses the ‘signal line’ on the charts.
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