Long term pattern for Indian SensexThere is a very strong support for the BSE Sensex which has been successfully defended in multiple watershed points in Indian history
1) 1980, when Indira Gandhi came back to power. Mrs. Gandhi replaced a government which was seen as being more friendly towards US and corporates.
2) 1984, when Indira Gandhi was assassinated amid the Sikh extremist movement and retaliatory massacres.
3) 1988-89, at the Height of the Bofors scandal and when bear Cartel was at its most active.
4) 2003-04, when the bear market due to the Dot com bust and the Ketan Parekh scam bottomed out.
5) 2020 Corona pandemic induced sell off.
Interestingly this support was not tested fiercely in the great financial crisis of 2008-09. India in general was probably one of the best performing countries throughout the recession as Indian financial systems were still largely in government hands.
There is a resistance line which has so far successfully repelled two well known periods of excess. The Harshad Mehta rally tested it in 1992 and the broader emerging markets rally tested it in 2007. There is a possibility that the current rally will again test this line if it gets up too fast. As of now, the markets are modestly overpriced, but nowhere near historical excesses. If global cues are not bad, there is room to run for this rally.
