Markets may see volatility

Technical Analyst, Deepak Mohoni :

The market reversed downward again on Thursday, with the Sensex down 570.51 points (4.18%) at 13,094.11, the Nifty 167.60 points (4.09%) at 3,925.75, and the CNX Midcap 146.90 points (2.84%) at 5,019.50. The largest negative contributions to the Sensex came from ICICI Bank (79.8 points), Reliance (76.5), Tata Steel (62.6), Infosys (51.7), ITC (39.5), HDFC (36.6), Bharti Airtel (34.0), Reliance Comm (30.5), Larsen & Toubro (24.2), DLF (15.7), Reliance Energy (15.4), HDFC Bank (15.2), Satyam Computers (11.2), NTPC (11.2), Grasim (9.7), TCS (8.2), Hindalco (8.2), Tata Motors (7.8), BHEL (7.4), Jaiprakash Assoc (6.3), Maruti Suzuki (6.1) and Hind Unilever (5.9). The biggest positive contribution was 9.3 points from State Bank.

The market's breadth was poor, with declines outnumbering advances 2.81 times on the BSE, and 3.86 times on the NSE. The volume in advancing issues was 10.3% (90.7%) on the BSE, and 8.7% (93.9%) on the NSE, while that in declining ones was 79.2% (8.9%) on the BSE, and 91.2% (5.8%) on the NSE.

The number of most heavily traded 240 stocks at 200-day highs remained one, while the number at 200-day lows rose from 9 to 60. The number at 5-day highs fell from 16 to 11, while the number of at 5-day lows rose from 24 to 108. The 240 stocks averaged a loss of 3.83%.

The Nifty opened over 75 points lower and continued to decline till its session low at 1325.  It recovered marginally after that to close a little above its low. The CNX Midcap also opened lower, but then settled into a band.

The intermediate downtrend that began on May 5 when the Sensex topped out at 17,736 continues, despite yesterday’s strong rally.

The levels above which the downtrend would end remain 14,450 for the Sensex, 4,325 for the Nifty, and 5,698 for CNX Midcap.

The downtrend is almost nine weeks old now. The Sensex, Nifty and the CNX Midcap have all made fresh bear market lows during this downtrend. This means that the bear market which started on Jan 10 when the Sensex topped out at 21,207 is still on.

The Sensex needs to close above its last intermediate top of 17,736 to signal a bull market. The equivalent for the Nifty is 5,300 and  7,192 for the CNX Midcap.

All the major global indices are in intermediate downtrends. The Dow still has to cross 12,400 to begin a new intermediate uptrend.

A majority of global indices are still above their last intermediate bottoms, but have fallen close to them now. The Shanghai, the Dow, the French CAC-40 and our indices have already fallen below their last intermediate bottoms.

The major trends of Aban Offshore, Hind Zinc and Goldstone Eng turned down yesterday.

The FIIs sold USD 86.9 million of stocks on Wednesday, while the MFs acquired USD 74.3 million. The FIIs are averaging daily sales of USD 80.3 million over the last five sessions, while the MFs are buying at a rate of USD 33.6 million.

All major global markets are in intermediate downtrends, and in long-term downtrends, too.

The Dow rose 73.03 points (0.65%) to 11,288.54, while the NASDAQ composite fell 6.08 points (0.27%) to 2,245.38.

Infosys fell 2.29% to USD 42.60, Satyam rose 0.04% to USD 24.60, Wipro was unchanged at USD 11.64, Tata Motors lost 5.32% at USD 8.90, ICICI Bank fell 0.88% to USD 27.13, HDFC Bank rose 1.21% to USD 71.26, Dr Reddy fell 1.49% to USD 15.19, MTNL rose 5.07% to USD 4.35, Patni slipped 0.19% to USD 10.25, Rediff.com lost 2.51% at USD 6.61 and Satyam Infoway plunged 10.73% to USD 3.16.