The Sensex is now in the third wave of the five described in Elliott’s wave theory and it would now see a multi-month rally, though share prices may come down for short periods, says a technical research report by US-based Elliott Wave International.
Though in 2008, the Sensex saw one of its steepest falls after more than a five-year rally, the report said that the correction envisaged before the third wave was over. The rally would continue for 15 years, the report further explained.
The report termed India, Taiwan and New Zealand as potential “baby bulls” and said the stock markets in Japan, Singapore, Hong Kong, China and Australia would be under the “bear” grip.
“The potential baby bulls completed only three waves down from their respective highs, which makes them strong candidates to rally back to at least near their all-time highs — if not beyond," the report stated.
Sensex had touched all-time high of 21,206.77 points on January 10, 2008.