State Of Limbo

DSeepak Mohini THURSDAY'S surge helped the stock market end the week in positive territory, despite three sessions of finishing in the red. The Sensitive Index ended the week 1.66% or 251.39 points higher, the Nifty was 2.20% up, and the CNX Midcap Index gained 2.37%. Tata Motors was the biggest winner among index stocks with a 12.6% gain. The other index stocks to go up included ONGC, DLF, Hindalco and Bharti Airtel with gains lying between 7.2% and 6.3%.      Mahindra & Mahindra was the biggest loser among index stocks with a 5.5% loss. The other index stocks to go down included Hindustan Unilever, ACC, Grasim and NTPC with losses falling between 5.0% and 2.9%. HOEC was the biggest winner among the more heavily traded nonindex stocks with a 27.4% gain. The other non-index stocks to go up included Ruchi Soya Industries, Bhushan Steel, Aptech, Bank of Rajasthan, HDIL, Jindal Steel & Power and Patni Computer with gains falling between 22.4% and 14.0%.      The newly listed Raj Oil Mills was the biggest loser among the more heavily traded non-index stocks with a 10.0% loss. The other non-index stocks to go down included Financial Technologies, India Cements, Bajaj Auto, Ambuja Cements, Indiabulls Financial, Nagarjuna Construction and United Spirits with losses falling between 5.2% and 3.3%.  INTERMEDIATE TREND  The Sensitive Index, Nifty and CNX Midcap Index had all breached their intermediate downtrend triggers earlier in the week, but then bounced back strongly immediately, instead of continuing with their decline. Meanwhile, global markets remained in intermediate uptrends. It may therefore be prudent not to write off our market's intermediate uptrend just yet. The best approach now would be to make the week's low of 14,700 as the revised level to breach for a confirmed intermediate downtrend. The equivalent figure for the Nifty is 4,359 and that for the CNX Midcap is 5,634. A rally past the last minor top (which was also the bull market high) of 16,002 for the Sensitive Index will confirm that the uptrend is still on. The equivalent figure for the Nifty is 4,731 and that for the CNX Midcap is 6,098.  LONG-TERM TREND  Our market's long-term trend is up, as is the case with a majority of global indices. The Sensitive Index, the CNX Midcap and the Nifty all made fresh bull market highs during this intermediate uptrend, indicating that the bull market is continuing at this time. The bull market can be said to have started with the Sensitive Index's October 27, '08 low of 7,697, and has resulted in a 108% peak gain for the index in nine months.  TRADING & INVESTING STRATEGIES  Buying for longer-term investing should now be done only after the next intermediate downtrend is confirmed beyond doubt, and runs for at least a week. The market is not showing any definite sectoral preference at this time, and relatively strong and weak stocks appear to be distributed across most sectors. Currently, metal stocks have some momentum in their favour, and may be suitable for short-term trading during rallies.  GLOBAL PERSPECTIVE  Almost all global markets are in intermediate uptrends, which are looking stable as of now. The Indian indices were more of an exception in breaching their intermediate downtrend triggers. A majority of global indices are in major uptrends now, and it could therefore be safely stated that we are in a global bull phase.      The BSE Sensitive Index had gained 5.4% in the twelve months that ended on Thursday, up four positions to the 6th place among 35 well-known global indices considered for the study. Shanghai continues to head the list with a 28.9% gain. Chile, Indonesia, Turkey and Malaysia follow. The Dow Jones Industrial Average has lost 19.1% and the NASDAQ Composite has lost 18.1% over the same period. (These rankings do not take exchange rate effects into consideration). (The author is an independent technical analyst)