The seven-day non-stop rally has recouped 75 per cent of the market capitalisation eroded during the preceding free fall as seven in every 10 stocks traded on the Bombay Stock Exchange staged a recovery (BSE).

The market capitalisation of BSE stocks had declined by Rs 463,713 crore between July 26 and August 21. The current rally has improved it by Rs 348,536 crore.

The rally is centred on large-cap companies; almost 90 per cent of the A-group stocks recovered much of the lost ground. This group accounted for 83 per cent of the market cap gain. It was responsible for 88 per cent of the market-cap loss.

This is in keeping with normal market behaviour, in which large-cap stocks are the first to melt as well the first to recover.

Thus, the recoup rally was weak in the case of stocks traded under trade-to-trade group, in which delivery is mandatory. Only 38.8 per cent of these staged a recovery.

On the other hand, 57.6 per cent stocks of B1-group stocks recovered. Of the 1,347 stocks traded under B2 and S groups, 66.6 per cent, or 897, recovered.

The recovery had been smart for 202 stocks, which closed at their new 52-week highs last week. Among these, 120 closed at their new all-time high. Reliance Industries [Get Quote], BHEL, IPCL [Get Quote], SAIL [Get Quote], Jai Corporation and Century Textiles [Get Quote] made their all-time high levels last week.

Capital goods, consumer durables and fast-moving consumer goods outperformed the market by recouping all of their market capitalisation lost between July 26 and August 21. The underperformers were information technology and pharmaceutical companies.

The BSE capital good index gained 11.97 per cent against a 9.5 per cent decline earlier. The FMCG index gained 9.72 per cent against a decline of 6.79 per cent while the consumer durable index gained 8.22 per cent against a decline of 5.97 per cent.

BSE's IT index gained 6.7 per cent in the current rally while it had declined by 14.12 per cent in the meltdown. Of the four front-line IT stocks, Satyam [Get Quote] Computer and Wipro [Get Quote] recovered 60 per cent of their market cap loss, TCS [Get Quote] 33 per cent and Infosys [Get Quote] Technology 39 per cent.

The BSE healthcare index was the second biggest underperformer with a gain of 4.15 per cent against a 9.45 per cent decline earlier. Among healthcare stocks, Glenmark [Get Quote] Pharmaceutical, Divi's Laboratories, Nicholas Piramal [Get Quote] and Ranbaxy Laboratories [Get Quote] outperformed with over 14 per cent rise in their market capitalisation. Sun Pharmaceuticals and Pfizer [Get Quote] declined by about one per cent.

The pullback in the last seven trading days can also be explained by the fact that Indian bourses had barely participated when global markets recovered. For the immediate term, the market seems a bit overbought and analysts expect a correction of 100-150 points in the S&P CNX Nifty in the near future.