Experts, however, caution that the ongoing rally could be a ‘bull trap’ in a bear market.
During previous crises, there have been many such traps — sharp upmoves — creating a belief that the worst is over.
According to an analysis done by Prabhudas Lilladher, there were three bull traps during the 2007-09 Global Financial Crisis — when the markets saw bouts of sharp rallies only to revert back to new lows.
Back then, it took 426 days for the market to form a bottom on March 2009. “While no two market cycles are alike, it is too early to say whether we will see a somewhat similar pattern repeat this time,” says the brokerage says in a note.