Technical Analyst, Deepak Mohoni: European and US markets made moderate gains last night, after a few had spent some time in the red. Asian markets are strong this morning, and the global short term trend remains up. We could expect further gains today due to the Asian rally.

The market rallied on Monday, with the Sensex up 286.03 points (2.02%) at 14,427.55, the Nifty 101.00 points (2.46%) at 4,209.05, and the CNX Midcap 86.40 points (1.53%) at 5,736.95. The biggest positive contributions to the Sensex came from ICICI Bank (74.6 points), Reliance (41.5), Bharti Airtel (33.1), ONGC (23.3), HDFC Bank (21.8), Larsen & Toubro (19.1), Tata Steel (16.0), Reliance Comm (15.9), BHEL (13.5), ITC (11.7), State Bank (11.2) and Hind Unilever (10.5). The largest negative contributions were from Infosys (19.2 points) and Satyam Computers (7.5).

The market's breadth was healthy, with advances outnumbering declines 2.75 times on the BSE, and 3.26 times on the NSE. The volume in advancing issues was 82.2% (35.9%) on the BSE, and 89.9% (31.6%) on the NSE, while that in declining ones was 12.8% (60.7%) on the BSE, and 8.9% (67.7%) on the NSE.

The number of Hotline stocks at 200-day highs went up from 2 to 4, while the number at 200-day lows dropped from 13 to 5. The number at 5-day highs went up from 7 to 17, while the number of at 5-day lows dropped from 178 to 30. The 240 stocks averaged a gain of 1.96%.

The Nifty opened sharply higher and around its session high. It then declined to hit the session low at 1200, improved a little and then flattened out into a range. The CNX Midcap also opened at its high, declined till noon, remained in a range till 1510, then fell to close at its low.

The intermediate downtrend that began on July 24 when the Sensex topped out at 15,869 continues.

The fall has cost the Sensex 2,089 points (13.16%) so far, amounting to a 90% retracement of the 2,314 point gain it made in the preceding intermediate uptrend.

A retracement is considered to be "healthy" when it is under 50%, and suspicions of a bear market start to emerge once it exceeds two-thirds - i.e. 66.7%. The 90% retracement is therefore a bear warning.

The levels above which a new intermediate uptrend would begin have moved down to 15,070 for the Sensex, 4,395 for Nifty, and 6,040 for the CNX Midcap.

The strong global rally that has followed the discount rate cut in the US could lead to another global intermediate uptrend, and one here as well, but it is still too early to tell whether this is likely. The next decline would answer that question.

The major trends of Satyam Computers and Lupin turned down yesterday.

Our bull market would end if the Sensex closes below its last intermediate bottom of 13,550, the Nifty below 3,980, and the CNX Midcap 5,460. That threat would be averted if an intermediate uptrend develops now.

The FII and MF activity figures for Friday have not been released. The FIIs were averaging daily sales of USD 174.4 million in the last five sessions until Thursday, while the MFs were buying at an average rate of USD 14.3 million.

Most global markets are still in intermediate downtrends despite the rally. The Hang Seng appears to be back in an uptrend, though. The threat of a global bear market would recede if more uptrends develop.

The Dow rose 42.27 points (0.32%) to 13,121.35, and the NASDAQ composite went up 3.56 points (0.14%) to 2,508.59.

Infosys was down 1.10% at USD 46.61, Satyam Computers fell 2.73% to USD 23.88, Wipro lost 0.22% at USD 13.79, Tata Motors lost 1.94% at USD 16.21, ICICI Bank fell 2.40% to USD 41.89, HDFC Bank dropped 2.25% to USD 82.06, Dr Reddy's Labs gained 0.26% at USD 15.44, MTNL fell 1.63% to USD 6.65, VSNL dropped by 2.98% to USD 18.53, Rediff.com lost 1.36% at USD 14.52 and Satyam Infoway went up 4.76% to USD 7.48.