The Telegraph
Since 1st March, 1999
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Last Week

Four weeks of rise and no signs of correction. The week showed bulls firmly in control with the sensex opening with a gap (previous Friday’s close was 3033) at 3047. The gap was not closed and the sensex ended at 3057.

The next day (Wednesday) it rose again on the back of rising tech stocks. Thursday was another up day (with a gap) and the market finished the week on Friday very strong (starting with a gap of 20 points) at 3142 after a big rally in global markets on Thursday.

Haw far can it go' Till Friday, the market showed no signs of fatigue and it is silly to try to guess when the correction will happen. It may happen later this week or may not happen at all with any significance.

A sideways movement with the sensex bouncing off 3100 will be a sure sign that the rally has a long way to go before a meaningful correction sets in.

Of course, the rise so far has been contributed mainly by Reliance Industries Limited and Infosys Technologies Limited. The latter looks over-extended and is due for a short-term correction.

A big positive sign for the rally has been rising volumes and rising investment by foreign institutional investors.

They have poured in a lot of money this month, taking big bets on the in-favour software stocks, on scrips like Reliance Industries Limited (RIL) and the odd old economy stocks like Tata Engineering and Locomotive Company (Telco).

There is no evidence of weakness so far and the robust stock prices may be anticipating some good fundamental news. Or it may be that the market has been so beaten down for so long that absence of bad news is good enough for the fund managers and operators to step in.

After all, by common consensus the market is undervalued at even current levels. It takes a leap of faith to call Telco (P/E-20) or Infosys Technologies (P/E-33) undervalued but then what would fund managers and brokers do if they call the market fully valued so far.

They have their interests to take care of. To go back to the market this week, there is a possibility that we will see a correction though as of now there are no signs.

Watch the 3100 level on the sensex and 1010 on the nifty. If these levels are violated decisively the short term trend would have turned down. Even then, it could mean that the market is making a base for a healthy rise in weeks to come.

Movement of Indices
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