Stuck In A Range

THE stock market went nowhere in a week characterised by two-way swings, with the Sensitive Index finishing just 0.10% or 17.49 points higher, and the Nifty 0.16% up. The CNX Midcap Index slipped 0.46%. 

    BHEL was the biggest winner among index stocks with a 7.0% gain. The other index stocks to go up included Bharti Airtel, Larsen & Toubro, Infosys and Reliance Communications with gains between 6.9% and 2.6%. 
    Sterlite Industries was the biggest loser among index stocks with a 5.4% loss. The other index stocks to go down included Tata Steel, Hindalco, Sun Pharmaceutical and State Bank with losses falling between 5.2% and 2.7%. 
    Kiri Dyes and Chemicals was the biggest winner among the more heavily traded non-index stocks with a 15.7% gain. The other non-index stocks to go up included Tata Elxsi, Balrampur Chini, Den Networks, Idea Cellular, Satyam Computers, Indian Hotels and Chambal Fertilisers with gains between 14.2% and 7.1%. 
    Thinksoft Global Services was the biggest loser among the more heavily traded non-index stocks with a 13.7% loss. The other non-index stocks to go down included Jindal South West Holdings, 
Nagarjuna Construction, Mastek, GVK Power & Infrastructure, Shree Renuka Sugars, Bank of Baroda and Cipla with losses falling between 10.7% and 4.9%. 
INTERMEDIATE TREND: The market is still in the intermediate uptrend that has been on since November 3. The levels below which the uptrend would end are now 16,925 for the Sensitive Index, 5,050 for the Nifty, and 6,850 for the CNX Midcap Index. (Figures are rounded down to the nearest 25). 
    The Sensitive Index has now been in a range between 16,900 and 17,400 (rounded figures) for about two weeks. A fall below this range will be a clear intermediate downtrend, while a rally above it would give the uptrend a boost. A majority of global indices are in intermediate uptrends, but most have yet to make fresh bull market highs, and are not far above their downtrend trigger levels. 
LONG-TERM TREND: The market's long-term trend is up. A close below the last intermediate bottom at 15,300 would signal a bear market. The Nifty's equivalent is 4,500, and that for the CNX Midcap Index is 6,300. The bull market is under a bit of pressure, as about 10% of the more heavily traded stocks are in major downtrends. However, this threat will recede if this uptrend results in substantially higher index levels. The majority of global indices are still in major (long-term) uptrends. 
TRADING & INVESTING STRATEGIES: There is no immediate threat to the bull market, so there is no need to reduce exposure to equities. However, the bull market is now over a year old, and it is best not to increase exposure either. Portfolios can be fine-tuned from time to time by switching stocks. If cash must be invested, this is best done after an intermediate downtrend has run for a week or more. 
GLOBAL PERSPECTIVE: Most global indices are also in intermediate uptrends, but are also tending to remain in a range. Hong Kong's Hang Seng is one of the few indices in an intermediate downtrend. 
    The Dow would fall into an intermediate downtrend if it were to fall below 10,175, which is the lowest of its last three minor bottoms, all of which are very close to each other. A fall below 9,600 would signal a bear market. 
    The Sensitive Index gained 78.2% in the twelve months that ended on Thursday, keeping it at the 7th place among 35 well-known global indices considered for the study. Turkey heads the list with a 104.6% gain. 
    Argentina, Sri Lanka, Russia and Indonesia follow. The Dow Jones Industrial Average has gained 21.5% and the NASDAQ Composite has gained 45.3% over the same period. (These rankings do not take exchange rate effects into consideration). (The author is an independent technical analyst)