The Telegraph
Since 1st March, 1999
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Last Week

On Monday we saw a sharp selloff on low volumes and an immediate resumption of an uptrend, mirroring the global markets, that had the market close strongly for the week. From 3037 on Monday, the sensex climbed all the way to 3169 on Friday, a rally of 130 points over four days.

Reliance, Telco, Bajaj Auto and Infosys led the rally. Most software stocks remained subdued, except Infosys, which will declare its results this week. Once again, the rally gathered steam once the 3100 level was passed. But then, four days are already over and will we see a continuation of the rally on Monday too and beyond, with a weak Nasdaq on Friday' A correction is imminent though it may be a small correction now with the sensex possibly getting support at the 3130 area.

On the higher side, we may hit a serious resistance at 3190 first and later at 3230, if at all we get there. Unless we get some terrific bullish news there would be little to keep the market up beyond 3230.

The absolutely best-case scenario is a rise to 3275 level though I have serious doubts about it. No matter what the bullish complex of fund managers, brokers and market commentators say, there is just no fundamental good news for 80 per cent of the large companies in the sensex on the horizon (the exceptions being Ranbaxy, Tisco, Telco and maybe State Bank of India) to keep the market charged up and going.

As I have repeatedly said, growth is happening in smaller listed and unlisted companies, especially those focused on the export market. An interesting sidelight to the ongoing rally was huge volumes on Friday in penny stocks, the erstwhile hot favourites like Silverline Industries, Himachal Futuristic, GTL (formerly Global Telesystems) Pentamedia and DSQ Software. Some of these companies are bankrupt and a sudden trading volume and price rise in these stocks shows signs of desperation by some market players.

This week, Infosys will declare its results. The market is expecting a guidance of 30 per cent in net profit for the next year. I guess it is too much to expect that market players would do even the basic numbers. Infosys will end this year with a 17 per cent growth. And it happens to be enjoying the second-best growth rate among the listed large software companies (after i-flex). My theme remains the same: sell the rallies (after five days), buy extreme weakness and ignore all predictions of a bull market for now.

Movement of Indices

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

One year ago       3462.99       408.83       1208.39       1145.90       791.70

One month ago       3244.80       385.09       1149.24       1046.60       752.85

One week ago       3115.44       366.80       1094.50       1000.60       716.15

March 31       3048.72       359.12       1071.45       978.20       701.35

April 1       3080.95       362.68       1081.91       984.30       706.20

April 2       3116.99       367.48       1097.05       999.40       717.15

April 3       3151.16       371.34       1108.89       1009.15       725.15

April 4       3167.70       374.50       1119.82       1016.95       732.00

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