The Telegraph
Since 1st March, 1999
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Last Week

Over five days last week, the stock market has moved by 50 points. The momentum is slowing but this is no reason to start looking below. Even on a weak momentum, the market can keep pushing higher as happened in January.

To give you some numbers, Sensex had hit 3414 on December 27 last year, up from 3382 the previous day. It hit 3417 on January 10 fell back and moved sideways right till January 22 when it closed at 3357 — a whole month of directionless trading which the market gurus interpreted as “consolidation pattern” before a climb up to the 3700 level. The next day, it gave in to a 200 point fall.

Are we floating in a similar expanse of still water now' If so, the longer we are, the greater is the chance of sudden volatility.

Last Monday, I had mentioned that bullishness is rampant and so prices can go anywhere but the rally is maturing. We saw the market almost stall, but its close above 3350 does not indicate any weakness. I had also suggested a time target of reversal this week. I am now revising this.

The selloff signal may still come by Tuesday afternoon. However, my sense is that the bulls may be able to prolong this run for some more time.

Even if I am not sure we are in a topping process as we were in January when almost all heavyweights were fully valued, they do not look undervalued now.

Let’s review the heavyweights. There is not an iota of serious buying happening in Infosys, Satyam and HCL Tech. HP and BP have stalled though they still look undervalued. Bharat Heavy Electricals is looking fully valued.

Reliance’s rise was fuelled by interested people (I hear they are placing 3 per cent of equity that was in the escrow account following the merger of Reliance Industries Limited, Reliance Petrochemicals Limited with a foreign fund. Will the bullishness last after the placement' I was wrong last week about Reliance annual general meeting date and contrary to what I had suggested, the price is firm but that could be cause of the placement).

Reliance’s petrochemical business is generating good cash flow but worries about its telecom business are rising.

Hindustan Lever is being pushed up on hopes that a good monsoon will revive its fortunes. Hindustan Lever’s recent poor performance was not caused by drought alone, but also by its own mistakes in foods and regional price warriors in personal products.

Among the other stocks, Ranbaxy continues to look good as does Telco. State Bank of India is topping out.

In all, it is a mixed bag. Not enough reason to be bullish and may be trifle early to be bearish. Many smaller stocks continue to look good, though.

Movement of Indices

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

One year ago       3311.16       402.40       1217.94       1082.85       788.40

One month ago       2960.62       365.13       1105.27       944.20       722.65

One week ago       3303.24       418.84       1269.40       1046.40       831.10

Jun 9       3337.31       420.81       1277.39       1052.10       835.55

Jun 10       3289.55       413.14       1253.33       1037.80       820.60

Jun 11       3314.60       416.80       1264.76       1044.10       827.80

Jun 12       3337.30       421.30       1278.13       1051.30       836.20

Jun 13       3354.14       423.09       1282.70       1056.20       840.10

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