The Telegraph
Since 1st March, 1999
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Last Week

Buy, buy, buy. Buy on declines. The temporary selling is over. Foreign investors are bullish and they been very smart in not buying in January. They waited for a reaction and bought on declines. There is a lot of buying interest at lower levels. Tech stocks are very attractive. Fundamentals are very good. Profits are great. GDP growth is robust. The budget will bring a handful of goodies. This has been the script for the last few weeks that has endlessly peddled in business papers and bubblevision, as CNBC is fondly called in the US.

And yet, the indices closed last week at their lowest levels since the third week of November. Brokers and fund managers who have little clue about where and why the stock prices are headed but look very confident when they extrapolate the recent past into the future, have once again a lot to answer for.

That does not mean that we will not have a reprieve. The market may indeed move up in the first two days of the week but the fall may not be over yet. The current fall may continue, driven by events, or fear or a desire to protect profits or avoid further losses. In fact, I am increasingly inclined to suspend my medium-term scenario. I had suggested that we would see a substantial decline from 3400 levels and then see another round of rise, which may be the top for the year. It may happen still but I am clueless right now. We will know once we see the quality of current decline.

We are approaching a situation where a lot of profits accumulated in the 600-point run from October (following large losses for six months before that), is almost gone. A fall of another 50-100 point fall in the sensex will create panic selling all round and set the stage for the patient readers of this column to step in.

What if the market turns around now' Look for substantial resistance in the 3260-3280 area. Higher up, 3110 would be another tough area to pierce. Meanwhile, a failure to reverse the trend would mean continuation of the earlier trend down. Expectations drive prices. On that front, there are great expectations from the budget and poor expectations from software companies and domestic manufacturing companies that make up the sensex.

Steel stocks are correcting and will present a buying opportunity soon. If the market goes up today and tomorrow, extreme short-term trade in Satyam, Infosys and ITC may be profitable.

Movement of Indices

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

One year ago       3557.06       393.29       1158.40       1150.00       781.05

One month ago       3335.35       392.61       1174.21       1078.95       772.35

One week ago       3279.77       387.49       1157.61       1057.50       759.10

Feb 10       3256.86       384.54       1147.86       1048.60       751.70

Feb 11       3261.47       384.86       1146.91       1048.00       750.55

Feb 12       3247.51       382.58       1141.41       1044.45       747.25

Feb 13       Closed       Closed       Closed       Closed       Closed

Feb 14       3223.41       379.38       1131.18       1036.00       740.65

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