Markets may see two-way moves

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European indices finished mixed with moderate changes, with London's FTSE-100 up 0.19% at 6,315.20, Germany's DAX up 0.14% at 7,648.58, and the French CAC-40 down 0.20% at 5,651.27.

 

Asian markets are mixed this morning, with the Nikkei down and the Hang Seng up. There is no clear global short-term trend just now, and the moves are narrower. We may see two-way moves again with the indices not changing much.

 

The market rallied on Monday, with the Sensex up 103.45 points (0.68%) at 15,422.05, the Nifty 10.75 points (0.24%) at 4,474.75, and the CNX Midcap 102.95 points (1.70%) at 6,146.75. The biggest positive contributions to the Sensex came from ICICI Bank (36.7 points), NTPC (22.7), BHEL (13.6), ITC (13.3), HDFC (8.4) and Infosys (5.1). The largest negative contributions were from ONGC (10.2 points) and Bharti Airtel (8.6).

 

The market's breadth was healthy, with advances outnumbering declines 2.80 times on the BSE, and 3.07 times on the NSE. The volume in advancing issues was 87.1% (86.6%) on the BSE, and 84.4% (90.2%) on the NSE, while that in declining ones was 11.9% (12.5%) on the BSE, and 15.0% (9.4%) on the NSE.

 

The number of Hotline stocks at 200-day highs went up from 16 to 24, while the number at 200-day lows remained zero. The number at 5-day highs went up from 150 to 165, while the number of at 5-day lows dropped from 8 to 4. The 240 stocks averaged a gain of 1.99%.

 

The Nifty opened higher and peaked in the first minute, then fell quickly to hit its low five minutes later. It then settled into a 25-point band for the rest of the day. The CNX Midcap opened higher, rallied till 1140, declined till 1325, and then rallied again to close at the session high.

 

The market remains in the intermediate uptrend which started along with other global markets. It began as soon as central bankers took steps to deal with the credit crunch that followed the sub-prime crisis.

 

Our uptrend would end if the Sensex were to fall below 13,871, the Nifty under 4,040, and the CNX Midcap under 5,420.

 

This uptrend has seen the Sensex and Nifty outperform the CNX Midcap Index so far. However, the mid-caps have started closing the gap now.

 

The uptrend is two weeks old, with an intermediate bottom established at the August 17 low of 13,780.

A closing below 13,780 would therefore signal a bear market. The equivalent for the Nifty is 4,000, and 5,420 for the CNX Midcap.

 

Meanwhile, the major trends of Maruti Udyog, Ranbaxy Labs, Alok Industries and Nocil turned up yesterday.

 

The market had come close to entering a bear phase with the Sensex retracing 90% in the last downtrend. However, the bull market will be clearly on should the Sensex cross its previous top of 15,869.

 

About half the global markets are in intermediate uptrends. Most global indices are in bull phases despite losing quite a bit of ground during the last downtrend.

 

The FIIs bought $167.6 million of stocks on Friday, and the MFs acquired $114.7 million worth. The FIIs are currently averaging daily purchases of $68.7 million over the last five sessions, and the MFs are buying at an average rate of $81.2 million.

 

The US stock and commodity markets were closed last night for Labor Day.

 

About half the major global indices are in intermediate uptrends, and the rest should follow if the current global rally lasts a little bit more.

 

Most major trends are up, with a couple of exceptions.

 

Looking at the commodity longer term trends, Brent Crude has started rising again after a two-month correction from its high.

 

Gold has been trading in a range near its year's high for the last six months. Silver is in a downtrend and has fallen close to the year's low.

 

Aluminium is in a downtrend and almost at its year's low, Copper has been in a range for the last four months that formed after it made its high, and Zinc is around its one-year low.