Market may fall further

European markets were mixed and little changed last night, while the US indices made moderate gains.
However, Asian markets are down this morning, and the global short-term trend remains down despite the rally in the US. This could mean a continuing decline in our market too.



The market declined further on Thursday, with the sensex down 258.66 points (1.49%) at 17,080.65, the Nifty 53.80 points (1.05%) at 5,081.70, and the CNX Midcap 65.85 points (0.94%) at 6,959.15. The largest negative contributions to the sensex came from ITC (45.8 points), Infosys (45.0), ICICI Bank (44.7), Larsen & Toubro (38.5), Reliance (17.2), Satyam Computers (16.9), State Bank (16.0), HDFC Bank (14.3), Reliance Energy (10.1), TCS (8.0), ONGC (7.1), BHEL (5.9) and Jaiprakash Associates (5.9). The biggest positive contributions were from Tata Steel (15.5) and Bharti Airtel (11.4).

The market's breadth was poor, with declines outnumbering advances 1.55 times on the BSE, and 2.08 times on the NSE. The volume in advancing issues was 54.4% (31.9%) on the BSE, and 40.2% (38.2%) on the NSE, while that in declining ones was 42.5% (42.4%) on the BSE, and 59.4% (61.3%) on the NSE.

The number of Hotline stocks at 200-day highs went up from 2 to 3, while the number at 200-day lows dropped from 2 to 1. The number at 5-day highs fell from 36 to 26, while the number of at 5-day lows rose from 91 to 121. The 240 stocks averaged a loss of 0.96%.

The nifty opened almost 40 points lower, and remained inside a 40-point range for the rest of the day. It closed in the middle of the day’s range. The CNX Midcap followed a similar course.

The indices are still in an intermediate uptrend. The uptrend has been quite persistent until now, being started on March 18 when the sensex hit a low of 14,677. The levels below which the uptrend would end remain at 16,589 for the sensex, 4,991 for nifty, and 6,797 for the CNX Midcap.

The intermediate uptrend coincided with a global one. The Dow rose to its highest level for the calendar year, and above its 200-day moving average. A few other global indices also climbed above their 200-day moving averages during the uptrend. However, markets are falling now, and the uptrend is under threat.

For the moment though, most global markets are still in major (long-term) downtrends, which means that a global bull market has yet to be confirmed.

All our indices are also in major downtrends, though the sensex, nifty and CNX Midcap had also closed just above their 200-day moving averages before falling. The major downtrend (bear market) would end if the sensex closes above its last intermediate top of 18,895, the nifty above 5,545 and the CNX Midcap 7,814.

The major trend of GE Shipping turned up yesterday.

The FIIs bought $80.6 million of stocks on Wednesday, while the MFs dumped $5.7 million. The FIIs are averaging daily sales of $3.7 million over the last five sessions, and the MFs are selling at a rate of $12.7 million.

European markets were mixed and little changed last night, while the US indices made moderate gains.
However, Asian markets are down this morning, and the global short-term trend remains down despite the rally in the US. This could mean a continuing decline in our market too.

Most global indices are still in intermediate uptrends, but the uptrend is under threat. Most major trends are still down.

The Dow rose 52.43 points (0.41%) to 12,866.78, and the NASDAQ composite went up 12.75 points (0.52%) to 2,451.24.

Infosys was down 0.95% at $42.83, Satyam Computers rose 0.20% to $25.59, Wipro gained 0.23% at $12.90, Tata Motors lost 1.28% at $16.16, ICICI Bank fell 2.71% to $43.06, HDFC Bank dropped 0.08% to $109.42, Dr Reddy's Labs lost 0.58% at $15.33, MTNL fell 0.98% to $5.07, Patni dropped by 2.24% to $12.65, Rediff.com gained 0.23% at $8.65 and Satyam Infoway fell 6.57% to $4.69.


Deepak Mohoni