Press Trust of India

New Delhi, Apr 8: The Indian stock market has been termed as a potential "baby bull" as the Sensex may continue to advance over next 15 years and is likely to retain its all- time high level of 21,000 during the period, a report says.

At a time when developed markets across the world are in a bearish phase, a technical research report by US-based Elliot Wave International has termed India, Taiwan and New Zealand as potential "baby bulls", while stock markets in Japan, Singapore, Hong Kong, China and Australia are going to be under the "bear" grip, the report stated.

The report has analysed that recent sharp reversal rally in Indian market, post the October 2008 lows, points at regaining earlier high levels.

It added that if the rally continues in the same proportion as between 2003 and 2008, "the Sensex may continue advancing for 15 years before reaching the end of wave".

"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, since then it plunged even below 8,000. The report stated that Sensex would now embark on third wave which could see the index witnessing a multi-month rally, although share prices may come down for short periods.

"The decline since the 2008 high can be counted as three waves. A three-wave decline opens possibility of a rally back to near the 2008 highs. But there is reason to set our sights even higher," the research firm said in its Asia-Pacific Financial Forecast report.

The report said each high and low in the stock market is calculated on the basis of waves. The highs achieved by the Indian bourses between 2003 to January 2008 forms the first wave, while the bear market, till it saw the October lows, formed the second wave.

Since 2003, when the Sensex was quoting around 5,800 levels and had seen lows to the extent of 2,904.44 points, it had been on an upswing and reached the 21,000 level from where it started coming down to below 8,000 levels.

So far this year, Sensex had regained 9.20 per cent to 10,534.87 points.

Elaborating further the report said, "the Sensex declined in three waves to the October low, where it retraced approximately 50 per cent of its 2003-2008 rally on a percentage basis. The index has also just broken out of its downward trend channel. "Even if the declines from their all-time highs later turn out to be only the first legs of a larger correction, the three wave corrections at present imply significant rally in the intermediate term. We should then be able to reassess the long term wave count from higher levels," the report said.