The Telegraph
Since 1st March, 1999
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Last Week

Last week I said that just 15 points after a huge global rally and a raft of excellent results from both old economy (Asian Paints, Housing Development Finance Corporation) and new economy (Mastek, Infosys Technologies)' were not a goodsign. I had said when the market fails to respond to good news, it is a bearish signal. “Could it be that just when everybody is complacent that Ms Market is preparing to inflict another nasty blow'”, I had asked.

Unfortunately, it turned out to be so. I had said that I had an equal number of positives as negatives to juggle with, “though I will be firmly in the bearish camp if the sensex persistently closes below 2995 and ends in that territory on Friday.” Once it slipped below 2995, it was a waterfall decline that left investors scared and technical analysts stunned. I had pointed out that “the downward trigger for the nifty is 970. As you can see we are not too far from these levels.

Through the week the market really struggled to stay above these levels rising on hopes and getting slammed on the head by some persistent selling by the FIIs.” The upward targets of 3100 and beyond look distant now, so let’s wait to talk of them a few weeks from now.

On Monday the sensex opened at 3012 and closed at 2998, alerting us to a weekly reversal from the shallow upmove of the previous two weeks. On Tuesday the market closed at 2966 — a clear signal of a major fall ahead though CNBC brought in respected technical analysts who were bravely calling the bottom.

On Wednesday the sensex closed down again though the fall was muted. On Thursday all eyes were at 2930, supposedly the rock-solid bottom for the sensex.

The index sliced through it effortlessly and then again through 2916, the previous intra-day bottom to close at 2908. On Friday the mayhem was all over as Hindustan Lever Limited and Reliance Industries Limited collapsed. The index dipped to 2955 and closed at 2975, a weekly loss of 185 points — the largest weekly loss in the past one year. Are we done'

I am afraid not. My worst downward target is around 2800. Maybe we will bottom out before that. Is the market going to go up in a hurry' Maybe. We may see a rally back up to 2950 quickly but the sustainability of that rally is in serious doubt. Are we going to go down again in another sharp downswing to 2600' Maybe not but what are the bullish triggers for this market' PSU disinvestment is dead, BJP has lost all legitimacy and the fiscal situation is bad. Brace yourself for a tough time and nibble very selectively. Bhel, Bajaj Auto and HDFC are showing strength, the last because of merger with HDFC Bank on favourable terms to HDFC'

Movement of Indices

       Sensex       BSE 200       BSE 500       S&P CNX Nifty       S&P CNX 500

One year ago       3022.16       308.92       909.88       983.20       628.95

One month ago       3021.08       357.55       1066.06       970.05       697.80

One week ago       3009.76       362.43       1079.90       971.65       708.10

Oct 21       2998.01       360.86       1075.41       967.35       705.45

Oct 22       2965.97       355.41       1059.60       962.50       694.70

Oct 23       2948.96       353.52       1053.86       957.35       691.10

Oct 24       2908.05       350.18       1043.83       946.90       685.50

Oct 25       2908.05       346.32       1032.47       932.20       676.30

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