Expect market to rally today: Mohoni

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Technical Analyst, Deepak Mohoni:

European indices were strong last night, and the US markets rallied as well. Asian markets are also quite strong this morning, and the global short-term is up once again. We can accordingly expect the market to rally today.

The market declined on Thursday, with the index down 337.33 points (2.99%) at 10,947.40, the nifty 114.65 points (3.29%) at 3,369.50, and the CNX Midcap 142.80 points (3.61%) at 3,815.55. The largest negative contributions to the index were from Reliance Industries (97.9 points), Larsen & Toubro (34.8), ICICI Bank (26.9) and ONGC (25.7). The biggest positive contributions were from ITC (22.0 points) and Hindustan Unilever (5.4).

The market's breadth was negative, with 2.22 times as many declines as advances on the BSE, and 4.04 times on the NSE. The volume in advancing issues was 10.0% (91.5%) on the BSE, and 9.6% (88.4%) on the NSE, while that in declining ones was 89.9% (8.3%) on the BSE, and 90.4% (11.6%) on the NSE.

The number of most heavily traded 240 stocks at 200-day highs fell from 7 to 3, while 200-day lows rose from 1 to 2. 20-day highs fell from 186 to 22, while 20-day lows rose from 1 to 2. 5-day highs fell from 192 to 26, while 5-day lows rose from 9 to 53. The 240 Hotline stocks averaged a loss of 5.25%.

The nifty opened higher but hit its session high at 1015. It then declined with fairly large falling tops and bottoms, and closed at its low. The CNX Midcap index followed a similar course.

The market remains in the intermediate uptrend which started on March 6 from the sensitive index's intra-day low of 8,047. The levels below which the uptrend would end remain 9,521 for the sensitive index, 2,962 for the nifty and 3,248 for the CNX Midcap index. Global markets are still in intermediate uptrends despite the sporadic sell-offs that they have faced.

The market's long-term is on the verge of turning up. The index had been in a range between 7,700 and 11,000 since the end of October, without any clear sequence of rising or falling tops and bottoms. That made 11,000 as the level to cross for a bull market signal, which it did yesterday. The nifty is also above its equivalent 3,250, and the CNX Midcap is on the verge of clearing the corresponding 4,000.

Over 70% of the Hotline stocks made 10-week highs or better during this rally, and almost 40% are above their 200-day moving averages. We are almost certainly in a new bull market now, and new investments can be made at the end of the next intermediate downtrend.

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

The FIIs bought USD 191.4 million of stocks on Wednesday, and are averaging daily purchases of USD 107.1 million over the last five sessions. The MF figure was not released. They were averaging sales of USD 4.4 million up to Thursday.

The global intermediate uptrend is still on, as the rallies have so far been larger than the declines. Some of the major trends also appear to be turning up.

The Dow rose 95.81 points (1.19%) to 8,125.43, and the NASDAQ composite went up 43.64 points (2.68%) to 1,670.44

Infosys rose 2.57% to USD 27.50, Satyam fell 2.04% to USD 1.92, Wipro gained 3.23% at USD 8.32, Tata Motors lost 2.82% at USD 7.59, ICICI Bank went down 1.72% to USD 17.67, HDFC Bank went up 1.50% to USD 71.13, Dr. Reddy fell 3.35% to USD 10.67, MTNL lost 3.62% at USD 2.93, Tata Comm went down 2.77% to USD 22.84, Patni rose 2.74% to USD 6.75, Rediff gained 12.24% at USD 2.20, and Satyam Infoway fell 2.04% to USD 1.92.