Expect stocks to fall today: Mohoni

Technical Analyst, Deepak Mohoni:

European markets declined quite heavily last night, and the US indices plunged as well. Asian markets are also down this morning, and global markets are facing another sell-off. We can accordingly expect stocks to fall today.

The market declined on Thursday, with the sensex down 165.27 points (1.11%) at 14,777.01, the Nifty 43.25 points (0.97%) at 4,433.55, and the CNX Midcap 14.75 points (0.26%) at 5,585.40. The largest negative contributions to the sensex came from State Bank (26.9 points), Infosys (26.7), Tata Steel (26.6), Reliance Comm (24.7), Larsen & Toubro (21.0), TCS (19.7), ICICI Bank (18.3), Bharti Airtel (17.3), BHEL (11.9), HDFC (8.9), NTPC (8.6), Satyam Computers (7.7), ITC (7.0) and Hind Unilever (5.0). The biggest positive contributions were from Reliance (43.0 points) and ONGC (19.9).

The market's breadth was poor, with declines outnumbering advances 1.22 times on the BSE, and 1.64 times on the NSE. The volume in advancing issues was 59.2% (94.7%) on the BSE, and 58.4% (97.3%) on the NSE, while that in declining ones was 37.3% (5.2%) on the BSE, and 41.2% (2.6%) on the NSE.

The number of most heavily traded 240 stocks at 200-day highs fell from 2 to 1, while the number at 200-day lows rose from 0 to 2. The number at 5-day highs fell from 210 to 76, while the number of at 5-day lows rose from 5 to 7. The 240 stocks averaged a loss of 0.48%.

The nifty opened higher and rallied further till its session high at 1010. It then declined steadily until it reached its session low at 1345. It closed a little above its worst. The CNX Midcap followed a similar course.

The CNX Midcap crossed its intermediate trigger of 5,406 on Wednesday to join the sensex and the nifty in intermediate uptrends.

The sensex’s July 16 low of 12,514 becomes an intermediate bottom. This is also the level to be breached for an intermediate downtrend signal, as the present rally started from there.

Several global indices are also in intermediate uptrends now, and it would be safe to assume that a global intermediate uptrend is under way. The US indices, most European ones and the Hang Seng are in uptrends now.

The Hang Seng and the Nikkei are among a minority of indices which did go below their previous intermediate bottoms, and there is therefore no indication yet that the global long-term downtrend could change.

Our market too is in a major (long-term) downtrend as it has falling intermediate tops and bottoms.

The sensex will need to close above its last intermediate top of 17,736 to enter a major uptrend (bull market). The levels for the nifty and CNX Midcap are 5,300 and 7,192.

There was no change in the major trend of any of the Hotline stocks yesterday.

The FIIs bought USD 405.5 million of stocks on Wednesday, and the MFs acquired USD 82.9 million. The FIIs are averaging daily purchases of USD 112.0 million over the last five sessions, and the MFs are buying at a rate of USD 19.2 million.

Most global markets are still in intermediate uptrends, despite the latest sell-off. Most remain in major (long-term) downtrends.

The Dow fell 283.10 points (2.43%) to 11,349.28, and the NASDAQ composite went down 45.77 points (1.97%) to 2,280.11.

Infosys fell 5.40% to USD 37.86, Satyam 5.79% to USD 20.81 and Wipro 5.01% to USD 10.80. Tata Motors lost 6.70% at USD 10.03, ICICI Bank fell 10.59% to USD 32.92, HDFC Bank dropped 8.27% to USD 84.37, Dr Reddy lost 2.61% at USD 14.93, MTNL rose 2.51% to USD 4.90, Patni dropped by 2.49% to USD 10.96, Rediff.com lost 5.01% at USD 6.44 and Satyam Infoway went up 0.58% to USD 3.48.