Eindices ended the week in the red for the first time in fifteen successive weeks, with the BSE Sensitive Index finishing 4.70% or 716.05 points lower, and the Nifty 5.89% down. The CNX Midcap Index lost 4.41%. Reliance Infrastructure was the biggest winner among the index stocks with a 7.1% gain. The other index stocks to go up included State Bank, Infosys, Hindustan Unilever and HDFC Bank, with gains between 5.3% and 1.6%.
Sterlite Industries was the biggest loser among the index stocks, with a 15.5% loss. The other index stocks to go down included Reliance Industries, Hindalco, ACC and NTPC, with losses between 13.5% and 10.4%.
IDBI Bank was the biggest winner among the more heavily traded non-index stocks, with a 8.0% gain. The other nonindex stocks to go up included PNB, Axis Bank, Bank of India, Reliance Natural Resources, Cipla, Tech Mahindra and Dr Reddy's Laboratories, with gains between 7.9% and 4.2%.
Jet Airways was the biggest loser among the more heavily traded nonindex stocks, with a 19.4% loss. The other non-index stocks to go down included Bhushan Steel, S Kumars Nationwide, JSW Steel
INTERMEDIATE TREND
The sensitive index and the Nifty breached their intermediate downtrend triggers of 14,527 and 4,365 respectively on the 17th June. The downtrend was confirmed beyond doubt when the CNX Midcap fell below its corresponding trigger 5,269 a day later. Several stocks had entered intermediate downtrends even before the indices, and it can be said that the 3-month old intermediate uptrend is finally over. The sensitive index gained 7,553 points during the intermediate uptrend, and a 25% to 50% retracement lasting around two weeks would be typical for a bull market correction. If this happens, the index would bottom out between 13,700 and 11,800 (rounded). These are purely indicative numbers, and the actual bottom could very well be outside this range.
A global intermediate downtrend is also probably under way, with a few indices now in a confirmed downtrend and the remaining quite close to entering one, despite Friday's rallies.
LONG-TERM TREND
The market's long-term (i.e. major) trend is up, which means this is a bull market. Over 90% of the more heavily traded stocks entered long-term uptrends and went above their 200-day moving averages during the intermediate uptrend which just ended. The bull market can be said to have started with the sensitive index's October 27, 2008 low of 7,697.
TRADING & INVESTING STRATEGIES
Additional long-term investing can be undertaken once the rally that started on Friday ends. Current long-term portfolios should be held on to, and this rally should not be used to exit from stocks. Banks, Pharmaceuticals, Technology and FMCG stocks look promising at this stage. Metals and Real Estate may be better suited for trading during the next intermediate uptrend, than for buying in a big way for the longer-term.
GLOBAL PERSPECTIVE
The global intermediate trend also appears to be down, with several indices falling to multi-week lows before recovering at the end of the week.
The major trends of a few global markets turned up recently. Brazil, China, Hong Kong and some of the other Asian markets are among those in bull phases, while US and European markets are not.
The BSE Sensitive Index lost 5.5% in the twelve months that ended on Thursday, down 2 positions to the 4th place among 35 well-known global indices considered for the study. Shanghai takes over as the best performer during that interval, with a 3.8% gain. Chile, Sri Lanka, the BSE Sensitive Index and Turkey follow. The Dow Jones Industrial Average has lost 29.1% and the NASDAQ Composite lost 26.6% over the same period. (These rankings do not take exchange rate effects into consideration). (The author is an independent technical analyst)
Sterlite Industries was the biggest loser among the index stocks, with a 15.5% loss. The other index stocks to go down included Reliance Industries, Hindalco, ACC and NTPC, with losses between 13.5% and 10.4%.
IDBI Bank was the biggest winner among the more heavily traded non-index stocks, with a 8.0% gain. The other nonindex stocks to go up included PNB, Axis Bank, Bank of India, Reliance Natural Resources, Cipla, Tech Mahindra and Dr Reddy's Laboratories, with gains between 7.9% and 4.2%.
Jet Airways was the biggest loser among the more heavily traded nonindex stocks, with a 19.4% loss. The other non-index stocks to go down included Bhushan Steel, S Kumars Nationwide, JSW Steel
INTERMEDIATE TREND
The sensitive index and the Nifty breached their intermediate downtrend triggers of 14,527 and 4,365 respectively on the 17th June. The downtrend was confirmed beyond doubt when the CNX Midcap fell below its corresponding trigger 5,269 a day later. Several stocks had entered intermediate downtrends even before the indices, and it can be said that the 3-month old intermediate uptrend is finally over. The sensitive index gained 7,553 points during the intermediate uptrend, and a 25% to 50% retracement lasting around two weeks would be typical for a bull market correction. If this happens, the index would bottom out between 13,700 and 11,800 (rounded). These are purely indicative numbers, and the actual bottom could very well be outside this range.
A global intermediate downtrend is also probably under way, with a few indices now in a confirmed downtrend and the remaining quite close to entering one, despite Friday's rallies.
LONG-TERM TREND
The market's long-term (i.e. major) trend is up, which means this is a bull market. Over 90% of the more heavily traded stocks entered long-term uptrends and went above their 200-day moving averages during the intermediate uptrend which just ended. The bull market can be said to have started with the sensitive index's October 27, 2008 low of 7,697.
TRADING & INVESTING STRATEGIES
Additional long-term investing can be undertaken once the rally that started on Friday ends. Current long-term portfolios should be held on to, and this rally should not be used to exit from stocks. Banks, Pharmaceuticals, Technology and FMCG stocks look promising at this stage. Metals and Real Estate may be better suited for trading during the next intermediate uptrend, than for buying in a big way for the longer-term.
GLOBAL PERSPECTIVE
The global intermediate trend also appears to be down, with several indices falling to multi-week lows before recovering at the end of the week.
The major trends of a few global markets turned up recently. Brazil, China, Hong Kong and some of the other Asian markets are among those in bull phases, while US and European markets are not.
The BSE Sensitive Index lost 5.5% in the twelve months that ended on Thursday, down 2 positions to the 4th place among 35 well-known global indices considered for the study. Shanghai takes over as the best performer during that interval, with a 3.8% gain. Chile, Sri Lanka, the BSE Sensitive Index and Turkey follow. The Dow Jones Industrial Average has lost 29.1% and the NASDAQ Composite lost 26.6% over the same period. (These rankings do not take exchange rate effects into consideration). (The author is an independent technical analyst)
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