The Telegraph
Since 1st March, 1999
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Last Week

Are we in for a relief rally over the next week or so' Looks like it. The sensex ended the week 13 points higher and decidedly up from the under-3000 level it sank to several times during the week. The nifty was up too. All major stocks looked resilient and that should entice investors to plunge in.

Hindustan Lever, Infosys, Reliance Industries and Reliance Petroleum were all up marginally for the week. The downmove that started at 3224 has been held in check for now. The bounce will take the index to at least 3070. In case the index pushes beyond that level, it may hit 3090. Once we turn back from there, the fall may be very sharp, taking out the earlier bottom of 2930 and going down further. Last week was eventful but the market was lackluster.

The market went nowhere, having resisted successive shocks ó domestic and foreign. Global economy and markets swooned but Indian software stocks were unaffected. Terrorists brutally reminded us our vulnerability but the market took it in its stride. Standard &Poorís downgraded Indiaís local currency debt but the market could not be bothered. All this has emboldened investors to believe that the worst is over for now. That, however, does not mean the start of a long rally.

Over the next few quarters the big themes will be the growth curve of the software stocks and the deteriorating state of government finances, especially the state governments.

Last week, the UP government slapped duties on paan masala and cigarettes. We will see more and more state governments raising taxes to maintain their waste on salaries and other expenses. Then it will be the turn of the central government to slam a budget on us laced with the phoney talk of nation-building and concomitant sacrifices.

Thatís some way off. Meanwhile, from next week the market will be on the edge about the quarterly results, mainly of software stocks. Speculative fervour will take these stocks up and the slightest hint of bad news will see massive selloffs. Digital, Satyam and Infosys Technologies may be particularly vulnerable.

However, positive comments will make the market delirious especially because these stocks have resisted the impact of waterfall decline in the Nasdaq over the last few weeks. In fact, Infosys and Wipro have shot up even as the Nasdaq and Dow crashed. At the time of writing on Friday night the Dow is down by 250 points and once again Indian software stocks are resisting the fall. A minor up move looks certain this week.

Movement of Indices

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

One year ago       2715.50       280.06       825.81       890.00       568.15

One month ago       3097.85       373.79       1116.76       987.70       730.95

One week ago       3024.35       357.97       1069.51       969.60       698.85

Sept 23       3021.28       357.58       1067.59       970.30       698.25

Sept 24       3022.25       356.59       1063.23       966.20       695.05

Sept 25       3021.08       357.55       1066.06       970.05       697.80

Sept 26       3014.69       357.37       1065.70       969.90       698.25

Sept 27       3037.26       359.31       1071.76       976.45       701.65

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