Technical Analyst, Deepak Mohoni : European markets declined quite heavily on Friday, and the US indices made moderate gains. However, Asian markets are recovering this morning, with the Nikkei up after starting in the red. The global short-term trend may be turning up now. This could help our stocks recover today.

The market declined on Friday, with the Sensex down 343.58 points (2.01%) at 16,737.07, the Nifty 99.10 points (1.95%) at 4,982.60, and the CNX Midcap 176.70 points (2.54%) at 6,782.45. The largest negative contributions to the Sensex came from Reliance (146.9 points), ICICI Bank (28.0), HDFC (26.7), HDFC Bank (23.4), State Bank (22.4), Infosys (20.8), Larsen & Toubro (19.4), Jaiprakash Assoc (18.2), Reliance Energy (14.9), TCS (9.4), BHEL (8.9), Hindalco (8.2), ACC (5.1) and DLF (5.0). The biggest positive contributions were from Bharti Airtel (14.2) and ITC (12.5).

The market's breadth was poor, with declines outnumbering advances 3.14 times on the BSE, and 4.89 times on the NSE. The volume in advancing issues was 10.2% (54.4%) on the BSE, and 10.0% (40.2%) on the NSE, while that in declining ones was 86.6% (42.5%) on the BSE, and 89.5% (59.4%) on the NSE.

The number of heavily traded stocks at 200-day highs fell from 3 to 0, while the number at 200-day lows rose from 1 to 4. The number at 5-day highs fell from 26 to 7, while the number of at 5-day lows rose from 121 to 172. The 240 stocks averaged a loss of 2.92%.

The Nifty opened lower but improved initially to reach its high at 1035, and then declined continuously for the rest of the day, closing at its low. The CNX Midcap followed a similar course.

The Nifty and the CNX Midcap index breached their downtrend triggers of 4,991 and 6,797 respectively on Friday and closed a little below those levels. However, the Sensex remained above its trigger of 16,589. The market’s intermediate uptrend is therefore on the verge of ending.

Global markets are also in a similar situation. Only a small decline would be enough to place them in intermediate downtrends.

The Dow had risen to its highest level for the calendar year during the uptrend, and there is a possibility that a global bull market could start. The next intermediate downtrend should settle the issue of whether a bull market is developing here as well as globally. A short and small decline would suggest that this is so.

For the moment though, most global markets are still in major (long-term) downtrends, which means that a global bull market has yet to be confirmed.

All our indices are also in major downtrends, though the Sensex, Nifty and CNX Midcap had also closed just above their 200-day moving averages before falling.

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

The FIIs sold USD 99.8 million of stocks on Thursday, and the MFs dumped USD 20.7 million. The FIIs are averaging daily sales of USD 19.5 million over the last five sessions, and the MFs are selling at a rate of USD 3.4 million.

Most global indices are still in intermediate uptrends, but the uptrend is under threat. Most major trends are still down.

The Dow fell 120.90 points (0.94%) to 12,745.88, and the NASDAQ composite went down 5.72 points (0.23%) to 2,445.52.

Infosys was up 0.19% at USD 42.91, Satyam rose 1.68% to USD 26.02, Wipro gained 0.70% at USD 12.99, Tata Motors lost 1.24% at USD 15.96, ICICI Bank fell 1.35% to USD 42.48, HDFC Bank dropped 2.33% to USD 106.87, Dr Reddy's Labs lost 0.52% at USD 15.25, MTNL fell 1.38% to USD 5.00, Patni went up 1.26% to USD 12.81, Rediff.com gained 0.81% at USD 8.72 and Satyam Infoway went up 2.35% to USD 4.80.