Mkts not ready for breakout yet

It was a disappointing end to the markets today. The first half looked good, it was a slow steady up climb. It looked promising at around 2 pm in the afternoon but then the last hour took away all gains. It won’t look too bad now because it’s just a sub-100 points cut on the Sensex and about 15-20 points cut on the Nifty. In itself, it is not a big deal. We went to 4,800 today which was a nice, slow gradual built up to that level. Once again for the third or fourth time at that level, there suddenly came a wave of supply and just about engulfed that nascent upmove today.

We are back to square one back to about 4,730 on the Nifty. Even the Sensex went to 15,900 and has come back to sub-15,700 levels. It’s the way the reversal happened in the last one hour that is discouraging for bullish traders, it just tells you that there is no conviction for higher levels yet. Despite better breadth in the last couple of days, there is still not great momentum being discovered by the market.

The breadth improved in the first half of the session. There were about 900 advancing to 300 declining stocks. By the time we closed, the breadth too had narrowed down considerably. In fact, the midcap Index gave up all it’s gains in the last one hour of trade and closed absolutely flat. Disappointing not just for largecaps but also for the midcap end of the market. Volumes were quite low at Rs 50,000 crore. So, there is no improvement which happened there.

Some stocks, which took the market down today include the likes of Bharti that had a bad day. Private banks like Yes Bank’s numbers yesterday lifted the mood a little bit, but today ICICI Bank, HDFC Bank, and Yes Bank all sold off a bit. That was quite surprising and disappointing. Suzlon had a bad day, Ranbaxy had a bad day, and Hindustan Unilever too did not look strong. A combination of all those stocks but primarily ICICI Bank and Bharti led the Nifty down.

On the flip side, Reliance Energy and some of those power stocks like Siemens India, ABB, and Power Grid had fairly okay sessions. Cairn India was a standout performer today and the market was led up in the afternoon by the Reliance Group of stocks; Reliance Industries, Reliance Petroleum, and even Reliance Energy looked pretty okay today but sadly we could not pull off the close.

A few stocks from the midcap space like GVK Power & Infrastructure were very active today. A few midcap technology stocks also stood out. There was a spark in pharmaceuticals and a few infrastructure stocks like Punj Lloyd etc also looked okay. Motilal Oswal Financial Services in the brokerage space; GSPL, and Orbit Corporation in real estate looked okay. Orchid Chemicals of course had a lackluster session because now the fun has gone out with Ranbaxy saying they are not interested in a hostile takeover.

A middling kind of day but a bit disappointing at the end. We are not ready for a breakout just yet.