Opportunities in Bear Markets and Consolidations post 1992, 2000, 2008 and 2020.

In our previous post Equity–Never been so Bad so Quick. What Next ? we looked at how the current fall has been the fastest and deepest in a long time.

Although every Bear Market where Index falls 30-60% and Broader Markets 40-70% is different but what we have noticed is the consolidations have some similarity.

A consolidation after a big market fall has some common characteristics.

  • The Leading Sector does not recover as fast. ( Banks have not been able to retrace 50% but Nifty has)
  • Broader Markets not able to retrace and go sideways with lower volumes.
  • The Trend Change is confirmed via higher highs.
  • Laggard Sectors and some New sectors/set of stocks start showing strength and leadership changes.

A trend change is confirmed whenever intermediate highs are crossed and trendline breakouts.

This is a Long Post . Do read till the end.

Let us start with 1992 Fall. We do not have a lot of stock data but will only look at the index.

1) 1992-1993 consolidation.

a) The Fall

Generally the fall after a bull market can retrace 50-61.8% of the Bull Market.

In the first fall of 40-45% from peak the Sensex retraced 50% of the rally of 1988-1992 which was almost 4x from 1988 lows.

By the next two lows it had retraced 61.8% of the move.

Sensex Retracement 1992

b) The Consolidation

From the first fall the consolidation forming a falling wedge/triangle lasted almost a year or 49 weeks.

Sensex 1992

c) The Trend Change

When A confirmation came when the downward trendline and higher top was made August 1993. In the next 1 year the Sensex reclaimed previous highs.

Identifying Bottoming Out Patterns covers this topic in details in the  - Online Technical Analysis Course 

d) Stock Specific Behavior

Generally 50% of the stocks do not make new lows in the consolidation as broader market trends to overshoot on the downside in the first fall itself.

2) The 2000-2003 Consolidation

a) The Fall

The first fall did pause around the 61.8% mark. But post a recovery it again made 3 new bottoms and made a full retracement.

Sensex 2000 Fall

b) The Consolidation

Consolidation 2003

After making a major bottom in September 2001 and a 40% bounce from the lows it made 2 higher bottoms.
The Consolidation lasted 3 years from the 1st bottom and almost 2 years from the final bottom made in Sept 2001.

c) The Trend Change

A trendline breakout from a triangle and a higher high happened in mid of 2003 and the Index went back to same highs in the next 6-8 months.

d) Stock Behaviour 

( The data is only NSE and has a lot of survivorship bias as it does not consider companies delisted, demerged. Also many companies used to be only listed on BSE)

February 2000 to Sept 2001 – Sensex down from 6150 to 2600.

Feb 2000 to Sept 2001

  • 58% of the stocks fell more than 50%   ( could be higher as many companies folded.)
  • 47% of the stocks fell more than 60%
  • Only 10% had a positive return.

Recovery from the Lows of Sept 2001 to April 2003. Sensex from 2600 to 2900.

Sept 2001 to April 2003

  • 75% of the stocks had positive return and higher then 2001 bottoms.
  • 46% of the stocks were up more than 50%.  ( 250 stocks.)
  • 25% of the stocks were up more than 100% from the 2001 lows.

Even though Nifty/Sensex were up 10-12% from the lows. Almost 141 stocks or 25% of the NSE stocks had doubled in those 2 years.

The End of the Consolidation February 2000 to April 2003

Feb 2000 to April 2003

  • 43% of the stocks were down 50% from the 2000 highs.
  • 29% of the stocks had a positive return and had crossed the highs of February 2000 !!

1999-2000 Bull Market was IT and Telecom. The rest of the market had already been in a sideways market from 1998.

d) Sectoral Change

We do not have a lot of Indices data for 2000-2003 but there are some on BSE

1) Autos


  • BSE AUTO fell 60-70% with the Markets but recovered 115% in 2001-2002.
  • When Sensex moved from 2600-2900 by 2003 this Index was up 75%
  • By 2004 it was up 5x from the lows and 60-65% higher from February 2000 peaks.

Capital Goods

Capital Goods

  • Down 60-65% from the peak and then recovered 100% from the lows by 2002.
  • Capital Goods were up 80-90% by 2003 bottom for Sensex which was only up 10-12%
  • Crossed the highs of 2000 also and was up 5x from lows and 60-70% from 2000 highs.
  • The Index went up to 21000 by 2007 and up 40x from 2001 lows and 20x from 2003 lows.


BSE Metals

  • Down 55-60% in the fall but recovered 120% and same highs by 2002.
  • Up 80% by 2003 with Sensex only up 12%
  • Up 6-7x by 2004.
  • The Index was up 20x from from 2001 lows and 10-12x from 2003 lows.

Oil and Gas

The index was also up 70-100% in 2001-2002 and 2001-2003.

PSU Index

BSE Psu Index

  • Fell 50-55% in the fall but recovered and made new highs in 2002.
  • Up 100% from the lows by 2003 and 130% up by 2002.
  • It was up 6x from lows of 2001.


The sector topped out with Hindustan Unilever and made a new low in 2003. Could not cross 2000 highs till 2005 and Hindustan Unilever was a laggard for a decade. Even Pharma started catching up only in 2004

IT SECTOR – Down 90%

IT Sector

Fall and Consolidation of 2008

a) The Fall

The fall was huge as it retraced almost 75% of the move. But also the rally was huge as well with Indices up 7x from the lows of 2003.

The first fall was of 30% in January 2008 and the final bottom in October 2008.


Nifty 2008 Fall

b) The Consolidation

Lasted only for 5-6 months from October 27th to March 2009 with almost similar bottoms on closing basis and 5-10% higher on lows.

c) Stock Behaviour

Jan 2008 to October 2008 – Brutal


  • 87% of stocks were down more than 50%.
  • 79% of stocks were down more than 60%
  • 60% of stocks were down more than 70%.

October to March 2009

 October 2008 to March 2009

  • 30% of the stocks made new lows.
  • 28% of the stocks were higher than 25%.
  • 70% of the stocks were higher by the 2nd dip.

Sector Change

Real Estate/Infra got whacked 70-90% in 2008 and Capital Goods also has been an underperformer ever since. FMCG,Pharma, Consumers. Home Building Materials, Chemicals, Banks and Financials took lead in the coming decade.

The Fall of 2020

a) The Fall

In percentage terms the fall maybe 40% but it has retraced 50% of the move from 2008 and 61.8% from the lows of 2010-2011.

Nifty 2020

b) The consolidation

The big question is have we made the bottom , or the next bottom would be a double dip or we have a few more legs to go. The retracement has been large just like previous bear market but its not a 60% fall like 1992/2000/2008. So for that reason most bearish expectations are placed at 6400-8500 where 6400 is the peak of 2008. But the stock behaviour is very close to the falls of 1992/2000/2008. That suggests we are getting into consolidation and may have just one more down leg which might have started from 9900.

c) Stock Behaviour.


  • 79% of stocks are down more than 50%
  • 70% of stocks are down more than 60%
  • 56% of stocks are down more than 70%

Price damage is almost similar to 2008.

d) Sector

Out of previous sectoral changes what we have seen is some thoughts to catch the next sector. New Sectors may have many new listings or companies who come out of nowhere or transform. Wipro was not an IT co.

  • IT and Telecom was a new sector in the late 1990s
  • Old Economy were laggards which did well in 2003-2007.
  • Real Estate and Infra were new sectors .
  • Pharma and FMCG were laggards of 2002-2010.
  • Chemicals were laggards. AgroChemicals a New Sector.
  • NBFCs was a new sector with new names. Bajaj Finance was a demerger. some were brokers before.

Going forward it would be a good time to look at laggards and new sectors or even Old Heroes which have survived. Price Action will be an important thing watch along with Sector Reasons,.


  • We compare current bear markets to previous bear markets as equity markets go through cycles and one can find similar behaviour in subsequent cycles.
  • For example in 1992/2000/2008 the Index fell 55-60%. The leading sectors Cements of 1992 or IT of 2000 or Infra/Real Estate of 2008 fell 70-90% and many never came back.
  • Also after a big bear market where 70% of the stocks have fallen more than 50% like in previous cycles the consolidations last long and then new leadership sectors emerge.
  • Many bear markets coincide with Events – September 2001 terrorist attack , Global Financial Crisis 2008 and Covid19 in 2020 . A lot changes in the short term , some in medium term and in long term we get back to human nature. ( After 2001 a lot of security systems changed, After 2008 everyone was Debt Averse, EMIs and Debt came back in few years, Lockdown has shown us how little we need to live but is that the Life we Want ?)
  • Nifty might have started a bear market in 2020 but the Bullish move of 2018-2020 was very narrow and broader markets are in a bear market since 2018. Price Fall is similar to 2000/2008 for broader markets.
  • Like in 2000-2003 the Index took a long time to bottom out but a lot of sectors and stocks did huge moves. Some bit of similarity with 2000-2003 is possible in broader market action.
  • There is one section of the large cap , large quality midcaps and strong businesses which are priced to perfection – A lot of FMCG, Paints, some Chemicals, some Pharma. some Consumer etc.Lot of herding in many Midcap names with MFs own 15% of equity and FIIs own 5-10%. There is other section of names in Smallcaps,Midcaps and many sectors which are priced for Liquidation. ( Not just below Replacement cost but below Liquidation Value.)
  • FII holding in BSE500 is back to the lows of December 2013 of 20% and in overall Total Market Cap down to 18-19%. Previously low was 16-17% in 2008 bottoms.
  • Over the next few months and years there will be a lot of opportunities due to mispricing but a bigger opportunity when the consolidation is over.
  • This is the time even if you do not buy but you need to keep researching ideas, sectors. Some times a lot of bull market sectors start not just because of the greatness of that sector but consolidation and bankruptcy of a large company in the sector. There could be various reasons. But after a Bear Market we do see new opportunities come up.
  • Some Examples

1) Cements were laggards post 1992 but did well in 2003-2007.

2) PSU Stocks, Metals, Capital Goods and a lot of Old Economy stocks did nothing in 1990s but went 20-100x in 2003-2007.

3) Pharma and FMCG was supposed to be Defensives. Went 10x-20x in 2010-2015 even when Nifty was not doing well.

4) Chemicals were commodity companies and did nothing for 2 decades and now are speciality companies.

5) NBFCs more got listed and delisted in 1990s but in the last decade but did superb between 2014-2018.

  • Also in the interim period of Consolidation there could be a lot of opportunities because of severe mispricing and bargains. Some can be cash bargains, some bargain coz of a fire sale by institutions, Insider Buying, Buybacks. These require a lot of research and conviction. The buying has to be done at times patiently and at times urgently. You may research a lot but not catch a lot , due to uncertainty/fear but these same names researched now will help in next cycle. I remember buying Garware Wall Ropes at 44 as a bargain with 4 PE and 6% yield , aarti Inds at 6 PE and transformation but later in 2014 at 3x-5x higher there were different reasons to buy – growth, quality, sector tailwinds etc.

What Next – My Thoughts?

  • Over the next 2-5 years there could be some sectors which could take up leadership due to various reasons. Some times new sectors come from New listings and some times from laggards.
  • Every Bull Market one makes mistakes ( I have made plenty, down 50% from peak. Highest drawdown since 2013.).
  • A Bear Market hurts you in various ways apart from the Equity Portfolio. Like today I do not understand what keeps me more worried my PF,Business or Covid19. Going forward there could be a lot of Job Losses and Business Losses too. ( Do read this it will help - https://www.safalniveshak.com/you-lost-your-job-now-what/ )
  • Its generally said Markets discount the future and the sharp fall in so many companies is an indication that things will now actually be tougher for a lot of jobs,businesses and more.
  • A lot of businesses, Jobs get hit due to absolutely no mistake of theirs. A performing friend lost a job because his Promoter had to shut down the profitable company due to lack of funds caused by a big hit in another business. Receivables and Bad Debts of one individual/company can impact other businesses.
  • Tourism, Aviation,Hospitality,Oil related and so many other sectors will get hit. ( Some of my holdings have been thrashed.).
  • A look into history tells you – Nothing Lasts Forever.
  • I am not old enough to have seen previous cycles but some things which I remember about how you get hurt in various cycles and recovery.opportunity also comes from unexpected ways.

A small flashback

Made money doing Promotions for Dot Com Companies and Marketing Surveys for Brands in 2000-2001. By 2002 when I joined engineering there were hardly any placements. We had previous year graduates as our Teachers due to lack of opportunities. I used to earn more than 50% of an Engineers pay giving Private Tuitions for a couple of hours daily. By 2005 a majority of our batch was placed with jobs in 3rd year of Engineering and results of 5 semesters. Was on Bench for 90% of my 6 months IT Job in 2006.2007 was a super bull year and business did well for us. By 2008-2009 Engineering Grads and MBAs had a tough time getting a job and even Job offers got delayed.Friends in US had to do odd jobs after Masters for some time.  A lot of people got laid off in 2008-2009 but luckily it did not last long. Portfolio got hit, Business hit and some money stuck in a Co-Op Bank which got taken over by a PSU Bank.  2011-2013 some layoffs happed in Equity Broking Cos. The whole model of Sub Broking got damaged who were a big set of our clients. Started a venture in Broking and closed in 6 months. By 2013 Portfolio,Business got hit. 2014-2017 was prosperous for many industries especially Equities. Since 2018 its been tough for people like me in Equities and post Covid19 is going to be tough for a lot of Businesses.


  • The worst way to deal with such a crisis is to compare your current state with what you had. For example a portfolio down 50-60% , A pay cut, Dwindling Business will get compared to the Peak of last couple of years- Portolio Peak, Appraisal/Bonus, Super Profit. The other way to look would be what do you have now and how long can you survive on it. In that survival period one needs to grind out, hustle, re-skill etc. Also in such periods one can definitely increase Work-Life Balance.
  • A lot of people will suggest how one needs to be positive and various things. The fact is one is bound to be worried with so much happening around. Be Worried but not Depressed !! Keep faith and self-belief.
  • Another way to deal with it is to focus on your hobbies and family. So find ways to spend your time which gives you emotional happiness. ( This period has been tougher for me as in earlier cycles would play a lot of sports. Now playing with twin boys is fun but stuck at home.).
  • The Consolidation periods are long and tiring. A lot of emotions at play everyday. Patience will get tested.
  • History also shows - Post such periods there comes a period of super opportunities . These opportunities give you enough chances to recover way beyond your mistakes.
  • This is the time where a lot of hard work will go into researching, reskilling, reading, learning and so many other things but no gratification or results in near term. But eventually it is these periods which decide how you will be able to do better in coming years.
  • Focus on what you have and what you can do over the next many months in various facets of life and not just Financials,Job,Business.
  • Do not lose faith, self- belief and integrity. Stop over-thinking. Keep it simple.
  • Best Wishes to Everyone.

Suggestions for Me .

  • Personally have found it difficult to do any long courses in consolidations. ( bot CFA books in 2007, Enrolled for CFP in 2009, Small Courses on Finance through 2011-2018 and met a lot of people.) So would love if you think any course/book/podcast which would help me learn – Please mail to nooreshtech@analyseindia.com
  • From our side we are trying to create content for learning for blog readers.

Youtube Channel  & Posts  ( Please mail for topics you would like us to cover)

  • My first youtube video was in 2008 and Webinar in 2009. Have been intermittently making some in between.
  • Me and my team mate Harsh Doshi will be making few videos over next many months for self-learning as well as for others. Some videos already made.
  • Some videos made.

    1)  How to Track Markets Using Google Sheets

    2)    How to Analyse Delivery Volumes

    3)    Relative Strength How to Identiy Relative Outperformers

    4)     How to Track Markets Using Google Sheets

    Please mail us interesting topics you would like us to cover.

    Online Technical Analysis Course  ( Fees Rs 6000)

    Finally created an Online Course which has 10-12 hours of Video Content. May add more also on suggestions.


    1. Rochak Bakshi
      May 21, 2020

      Well written and from the heart.Well done Boy.

    2. JATINDER Sharma
      May 21, 2020

      Very good article, insightful! Key take away is the philosophical one..be worried but not depressed! Have faith n self belief..?

    3. JIGS
      May 21, 2020

      Hi Nooresh,
      Good and nice post after long.
      This is JIGS. I read all your twits and blog posts as I always considered you a very genuine Tech Analyst.
      My limited experience tells me Nifty bottoms or big sectoral rotation (e.g. Infra theme in 2000s to Consumer in 2010s) never happen in 1 month. Also, when bottom is made 90% of participants are in shock and have no money to buy anything (2001, 2008).
      I think we may see continuation of Nifty uptrend may be up to 200 day MA for next 3 months or so due to unlimited money printing happening in world now. But at the same time fundamentals of stalled economy has to catch up Nifty someday so I have a feeling Nifty may never go above 10 months MA on monthly close basis and much bigger downside awaits us in 2021. That reset may give new sector for 2020s. Will it be Agri commodities/Agri input sector? I consider Pharma as defensive (Like IT) not a major leader. Before that I am more more concerned for difficult next year :-(.

    4. Madhav Sane
      May 21, 2020

      A rare Introspection.A honest mans narration. it touched my heart.Apart from business knowledge is the king.Major lesson to be learned is booking profit with SWP

    5. Ravi Visvanathan
      May 22, 2020

      Excellent. Sound very honest and simple.

    6. […] Opportunities in Bear Markets (Nooresh) […]

    7. […] For having a look at past crises in the Indian financial markets go to https://nooreshtech.co.in/2020/05/opportunities-in-bear-markets-and-consolidations-post-1992-2000… […]


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