The Telegraph
Since 1st March, 1999
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Last Week

I can hear the bear snarling again. It was a great run while it lasted - almost 600 points or more than 22 per cent in the sensex — and it is time to give back some of those gains and prepare for an ascent again later in the month.

After a whole week of agonising sideways movement within a band of 50 points, the sensex has had a low close for the week after a weak rally with the advent of the New Year on Thursday.

The fall was led by the same stock that had caught the market by the scruff and dragged it out of its coma on October 29th — Reliance Industries. Its gas discovery and new telecom launch (not yet launched, on a closer look) were all in the price of Rs 300. The reality facing investors is this quarter’s results which, given the huge rise in oil prices on the cost side and not-so huge rise on the sales side, could mean a squeeze on profits.

Next week we may see the market trying to make an effort to climb back to the 3380 level just as it did try to climb up to the 3400 level and failed.

A failure to cross over 3380 and a breakdown below 3360 will mean a fall to around 3300. In the best case scenario, the fall may be arrested there. If not, we should be looking at sub-3200 level. What will take the market there' Since there is a complete uniformity in the view that the market is grossly undervalued at these levels, there may be little selling. I can only see some national and international event outside the market triggering off the steep decline.

Or it could be the average performance of all software companies except Infosys. Infosys is primed to deliver great results but it may be already in the price. After Friday the 10th when Infosys declares its results we will know whether we are going to see an immediate upturn. In any case, once the market works off the current bullishness, it should turn up again, fuelled by the budget expectations.

The other heavyweights in the sensex are not looking too good. ACC, Telco, Bharat Heavy Electricals Limited and Hindustan Lever Limited are ready for a fall or at least do not look good for a spurt anytime soon. ITC has broken out again and is headed higher during the course of the year. It is a great medium-term buy. In short, a muted fall now and a substantial rise later is what I would be looking for. Will that second substantial rise take us to the top for the year' We shall see.

Movement of Indices

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

One year ago       3308.02       347.69       1023.80       1072.25       712.90

One month ago       3230.14       381.33       1136.97       1055.00       747.30

One week ago       3398.00       394.62       1178.01       1098.40       774.30

Dec 30       3374.97       393.20       1173.48       1091.95       770.85

Dec 31       3377.28       394.04       1176.73       1093.50       772.85

Jan 1       3390.12       395.90       1181.99       1100.15       777.15

Jan 2       3365.06       395.36       1180.18       1093.05       775.15

Jan 3       3357.54       394.68       1177.94       1089.60       773.95

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