The Telegraph
Since 1st March, 1999
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Last Week

Again and again 3100 is turning out to be a great support level for the sensex. Last Friday, it dipped to 3099 and bounced back. The sensex has closed below 3100 just for a day in this entire fall. Last Monday, I had mentioned that the first short-term serious resistance is at 3230. I expected to go past that to 3275.

In the event, a huge down day anticipated in the US markets on Monday (as indicated by the futures prices), led to a massive selloff. The decent-sized rally I was anticipating got fizzled out in four days. Instead, we were holding our breath to see if 3100 would be broken this time. Over five days we had given up everything we had gained over four days before that.

Normally, this would signal a continuation of the trend, in this case, downtrend, because powerful weekly reversals that we saw the previous week usually lasts for a couple of weeks. Since we did not see more than a week of rise we may be headed lower this week. However, the downward momentum is not so powerful right now and we may see a minor rise, before we see a breakdown.

If the market rises next week, expect resistances at 3145 and 3160. Above 3160 we would be inclined to revisit the bullish scenario that I had in mind last week. What may lead us higher are ITC, Hindustan Lever and Reliance. The drags could be software stocks.

Over a slightly longer term, I am afraid, we are not near a bottom. The market is probably headed for the sub-3000 level, probably down to 2930 area. When, if at all, do we see that level'

Probably with the annual results, that will start coming out from the third quarter. As I have been repeatedly saying, the market will not go anywhere without earnings momentum. And no matter what the business media, brokers and fund managers tell you, not a single company in the sensex can show that. Sector after sector are facing serious problems of oversupply and lack of pricing power, something that regular readers of this column are well-acquainted with.

Even Tisco, the lone company enjoying a growth momentum, will have to reckon with a temporary slack in steel offtake. The market will wake up to the poor fundamentals soon.

Movement of Indices

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

One year ago       3469.35       393.90       1164.68       1129.55       775.50

One month ago       3281.92       387.34       1156.15       1055.55       756.55

One week ago       3200.15       375.76       1120.01       1030.55       733.35

March 24       3140.36       370.53       1104.32       1013.90       723.50

March 25       3140.42       370.23       1103.14       1011.30       721.60

March 26       3143.58       370.05       1102.27       1013.85       722.15

March 27       3116.79       367.67       1096.26       1002.70       717.65

March 28       3115.44       366.80       1094.50       1000.60       716.15

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