Markets may fall on back of global sell-off

Technical Analyst, Deepak Mohoni :

The market rallied on Monday, with the Sensex up 71.99 points (0.54%) at 13,525.99, the Nifty 14.00 points (0.35%) at 4,030.00, and the CNX Midcap 42.40 points (0.82%) at 5,191.50. The biggest positive contributions to the Sensex came from Infosys (32.5 points), ITC (26.2), State Bank (18.5), Satyam Computers (18.5), Hind Unilever (12.5), Bharti Airtel (10.0), Tata Steel (8.7), Jaiprakash Assoc (7.0), ONGC (6.8), Mahindra (6.0), Hindalco (5.3), Maruti Suzuki (5.0) and ICICI Bank (5.0). The largest negative contributions were from Reliance (75.2 points), Reliance Comm (19.4), BHEL (8.5) and Larsen & Toubro (5.8).

The market's breadth was healthy, with advances outnumbering declines 2.60 times on the BSE, and 2.89 times on the NSE. The volume in advancing issues was 81.3% (84.6%) on the BSE, and 57.4% (90.4%) on the NSE, while that in declining ones was 18.6% (10.8%) on the BSE, and 41.0% (9.4%) on the NSE.

The number of most heavily traded 240 stocks at 200-day highs remained one, while the number at 200-day lows dropped from 9 to 7. The number at 5-day highs went up from 59 to 95, while the number of at 5-day lows dropped from 30 to 17. The 240 stocks averaged a gain of 1.33%.

The Nifty opened more than 50 points stronger and rallied for almost an hour before settling into a range. It declined in the last hour of trading and closed around its low with a reduced gain. The CNX Midcap followed a similar course.

The intermediate downtrend that began on May 5 when the Sensex topped out at 17,736 continues.

The levels above which the downtrend would end remain 14,450 for the Sensex, 4,325 for the Nifty, and 5,698 for CNX Midcap.

The Sensex crossed last Wednesday’s high of 13,712 and the Nifty 4,107 yesterday, and this could be leading to an early intermediate uptrend.

The Sensex, Nifty and the CNX Midcap have all made fresh bear market lows during this downtrend. This means that the bear market which started on Jan 10 when the Sensex topped out at 21,207 is still on, and six months old now.

The Sensex needs to close above its last intermediate top of 17,736 to signal a bull market. The equivalent for the Nifty is 5,300 and  7,192 for the CNX Midcap.

All the major global indices are in intermediate downtrends. The Dow still has to cross 12,400 for a new intermediate uptrend.

A majority of global indices are still above their last intermediate bottoms, but are close to them. The Shanghai, the Dow, the CAC-40 and our indices have fallen below theirs.

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

The FIIs bought USD 132.0 million of stocks on Friday, while the MFs dumped USD 16.3 million. The FIIs are averaging daily sales of USD 28.4 million over the last five sessions, while the MFs are buying at a rate of USD 28.4 million.

Global indices remain in intermediate downtrends despite the rallies seen recently.

Global markets in major (long-term) downtrends.

The Dow fell 56.58 points (0.50%) to 11,231.96, and the NASDAQ composite went down 2.06 points (0.09%) to 2,243.32.

Infosys was up 0.23% at USD 42.70, Satyam rose 5.00% to USD 25.83, Wipro gained 0.69% at USD 11.72, Tata Motors gained 2.70% at USD 9.14, ICICI Bank went up 2.65% to USD 27.85, HDFC Bank rose 0.06% to USD 71.30, Dr Reddy's Labs lost 0.13% at USD 15.17, MTNL stayed unchanged to USD 4.35, Patni went up 7.90% to USD 11.06, Rediff.com lost 6.20% at USD 6.20 and Satyam Infoway fell 1.90% to USD 3.10.