The Telegraph
Since 1st March, 1999
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Last Week

A change in intermediate trend at last' Almost everybody seems to think so. The sweet part for the market is that old heavyweights like Infosys, Wipro, Reliance, Telco and ACC have led the charge up. These are familiar solid names and there is a comfort for the marketmen in seeing these go up. Yet we need more confirmation before we can say that 2828 was THE bottom. The current rally has been very selective. Just five stocks have surged so far.

Most people will tell you, thatís how it starts. A few big ones start going up and consolidate. Then others catch up. Finally, there is a big surge all round that creates a top. The whole process lasts over months. Before we can say thatís what is going to happen this time, we have to see more evidence. Evidence will come in the shape of correction.

Sensex will surge today in the opening hour. A small correction during the day will bring in those who feel left out of the rally. Thereafter comes the real test. By Wednesday if the correction is shallow we are in for a longer rise.

However, there is another round of correction expected, the weekly one. If the Sensex rallies to 3100, falls back to just around 3000 and then rallies again we have seen the worst for a long time.

How probable is it' It is impossible to forecast now because sentiment is getting decidedly bullish. Everybody wants to buy, buy, buy and they have waited far too long. So the brute force of money may create a rally.

I am still skeptical of a durable rise but do acknowledge the force of fund flows against which logic fails. Fundamentally, nothing has changed. Pricing power does not favour large companies like Hindustan Lever Limited, Nestle and Britannia or durable goods companies. Software is the only bright spot.

Worries remain on both domestic and international front. The world is witnessing a synchronised global downturn under which for the first time the United States of America, Japan and western Europe are all going down together. The domestic economy is flush with liquidity but there is a surplus of everything and so business investment is on hold. Without business investment there is no increase in jobs, real estate and order for equipment. The question is, since when has all this bothered the market'

If you are bullish for the very short-term buy nifty futures on correction. If you are a cautious investor wait to see how the rally develops. There is one more downleg to come after the current rise.

Movement of Indices

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

One year ago       3180.23       328.32       968.45       1035.70       669.65

One month ago       Closed       Closed       Closed       Closed       Closed

One week ago       2956.84       355.96       1060.80       956.95       696.35

Nov 11       2948.04       354.04       1055.07       954.05       693.85

Nov 12       2961.24       355.93       1060.06       959.85       696.60

Nov 13       2960.66       357.12       1063.52       962.65       698.25

Nov 14       2986.56       356.75       1062.46       971.90       697.75

Nov 15       3033.91       360.78       1704.05       990.35       705.90

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