The S&P BSE Sensex rallied over 400 points on Thursday, led by strong buying in frontline stocks like ITC, Reliance Industries, ONGC and TCS. Benchmark indices witnessed a strong short-covering rally after being seeing oversold levels over some days now despite a weakness in the rupee.
Is the sharp pullback more of a dead-cat bounce or have the markets created a bottom and can rally from here despite global headwinds?
Dead-cat bounce is a situation observed in the markets when a small/brief recovery is seen in the price of the stock which is in a downtrend.
Both S&P BSE Sensex and Nifty have plunged over 5 per cent so far in August, weighed by a weakness in the currency and uncertainty over US Federal Reserve's plan to taper off its $85-billion monthly bond-purchase programme.
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