The Nifty has rallied smartly in the past few weeks from a low of 2525 on 6 March to 3687 on May 16. The media is glorifying this by saying this is a 46% increase. A few points regarding this:
1) If something falls from a high like say 6000 to 2200 any rise above that from 2200 will be a huge percentage gain. But it is still a huge drop from the 6000 levels
2) There are very few "lucky souls" who bought at 2200 levels when the market was gripped with fear
3)So is this the start of a bull amrket. if one were to do a simple Fibonacci Retracement Analysis from the high of jan 2008 to the fall to 2228 on 27 October 2008 one will observe that 3800 levels is a 38.2% retracement of the fall.
A bear market is characterised by strong rallies. 30-40% up moves are very common from the lows. Only time will tell whether this is a bull market starting or a bear market rally. As a day trader, frankly I don't care. But my advise to traders and investors is to be careful and always have your stops in place.
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