The young bear is two weeks stronger and the old bull is two weeks weaker. The snarls and swipes of the former eventually proved a bit too much for the latter in the previous week. Sorry to be such a part-pooper but I had suggested three weeks ago that many unthinkable things were about to happen.
One of these, I had said, would be the surprising results of Wipro, Satyam and others that would make Infosys’s results look great by comparison. Satyam has fallen from a high of Rs 290 a week ago to Rs 224. May be its good time to buy for all those experts who have been exhorting us to believe in the Great Indian Offshorisation story'
After an unusually long struggle the market cracked in the last two days of the previous week. I have been suggesting that it was just too abnormal for the index to exhibit this kind of calm (I had looked at the data from 1992 onwards) and it probably presaged a violent move in one direction. I suspected that this would be towards the downside because after a 600-point rally it would be too unusual to expect another big upmove. Most commentators, of course, thought that the market was “consolidating” by its sideways movement and would start moving up soon.
Last week the sensex bounced back from just under 3200 and closed the week marginally down. Where do we go now' We are headed up on new hopes that the “correction” is over. The rise will be hesitant and marginal - more driven by hope of a good budget and liquidity than any fundamental reason. What will take us there' Software stocks, mainly led by Infosys Technologies and also contributed by Reliance Industries, Ranbaxy, ITC, Tisco, State Bank of India and maybe even cement stocks.
Beyond that I am clueless. There is a good chance that we will see a fresh downturn after a minor rise is over. The resistance to watch out for would be 3290-3320 in the sensex and 1062-1070 in the nifty. Investors must focus smaller companies that are doing extremely well, like Ucal Fuel Systems. Unfortunately, I don’t see much value in most sensex stocks. Almost all stocks in the steel sector will give great returns over the course of this year. As will some engineering companies.