The Telegraph
Since 1st March, 1999
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Last Week

The market looked ripe for a short rebound, I said last week, and we got one — in exactly the classical fashion. First there was a short bounce off the short-term support and recent bottom of 2930. Then there was a follow up rally to 2973.

Then a sudden reversal back towards 2930 to shake out the weak-hearted. Then a ferocious rise from 2937 level to 3000 in just one and half days. We ended the week with a gain of 60 points, the market having gained 4 of the 5 days. The nifty rose 22 points thanks to gains in Infosys Technologies, Wipro, Digital and Satyam.

How much more' Quite a bit I guess. We may see 3100 (as usual with the caveat that there should be no major negative news) and may be even 3140 if international markets start to clear their oversold levels.

However, once again it may not be sustained rally at that level and we will possibly head back towards 2900. But that is going too far. As and when we reach 3100 we will review the strength and duration of the rally to figure out when and how much of retracement we will get.

All my short-term indicators pointed to a temporary let up in selling I said last week — enough to create a short bounce. But the indicators have not given signals of major buying —except in Infosys.

The bulls will look back and convince themselves that 2930 was a major bottom and we should see a sustained rally from here on. Conviction also comes from the general notion that this is supposed to be seasonally the best time for stocks — between Diwali and Budget. However, this is too facile an argument.

Each year is different and so we get different results each time. Since 1992, the sensex ended the November down in 6 out of 10 times, on one occasion there was no change. Of course, the market is reflexive and does work at times on self-fulflling mechanism.

If the largest number of players believe that from Diwali to budget time will be a rally time, we may get a bit of that — unless of course there is a major negative news. In which case all bets are off. A sustained rally may start only from November.

The earnings season has brought surprising good news from Infosys, Mastek and MphasiS. Indian software companies are getting more work and the call-centre business is doing very well — at least for now.

Some of the old-economy companies will report decent results too — like Telco, possibly Bhel and the top Indian drug companies like Cipla, Dr. Reddy’s Laboratories and Ranbaxy. Expect a good week or two.

Movement of Indices

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

One year ago       2943.69       297.46       875.14       954.90       602.40

One month ago       3125.66       368.24       1099.08       998.85       719.35

One week ago       2930.51       349.62       1043.14       948.20       683.40

Oct 7       2952.78       354.33       1057.51       954.75       693.40

Oct 8       2973.35       356.85       1065.04       960.80       697.70

Oct 9       2956.89       354.54       1058.25       954.75       693.40

Oct 10       2969.49       356.65       1063.83       958.45       696.50

Oct 11       2995.77       362.10       1079.20       971.05       707.50

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