The market ended the previous week with modest gains, with the BSE Sensitive Index finishing 1.01% or 148.41 points higher, and the Nifty 1.11% up. The CNX Midcap Index gained 0.48%. Tata Steel was the biggest winner among the index stocks with a 13.0% gain.
The other index stocks to go up included ONGC, HDFC, Mahindra & Mahindra, and NTPC with gains falling between 9.0% and 4.8%.
Tata Motors was the biggest loser among the index stocks with an 11.7% loss. The other index stocks to go down included Reliance Communications, ACC, Hindalco, and Jaiprakash Associates, with losses falling between 6.4% and 3.1%. Educomp Solutions was the biggest winner among the more heavily traded non-index stocks with a 25.6% gain. The other non-index stocks to go up included Tulip Telecom, NIIT, BEML, IRB Infrastructure Developers, Torrent Power, Gail India and Aptech with gains falling between 22.0% and 10.8%.
Gujarat NRE Coke was the biggest loser among the more heavily traded non-index stocks with a 15.2% loss. The other non-index stocks to go down included Suzlon Energy, Idea Cellular, Firstsource Solutions, Petronet LNG, India Cements, KS Oils and Gateway Distriparks with losses falling between 13.4% and 5.2%.
INTERMEDIATE TREND
The market is in an intermediate uptrend which started on June 23 at the sensitive index’s intraday low of 14,017. The uptrend has thus already lasted two weeks, but is moving at a snail’s pace when compared to the one from March 6 to June 12. The intermediate uptrend would end if the sensitive index were to fall below 14,356, the Nifty below 4,250 and the CNX Midcap under 5,361.
These levels are the indices’ previous minor bottoms, and are also last week’s intraday lows. The intermediate downtrend that preceded the current uptrend saw the sensitive index retrace just 20% of the previous uptrend’s 7,553-point gain. This may be considered to be a “healthy” correction, as most bull market retracements tend to fall between 33% and 50%. The implication here is that the long-term demand for stocks can be seen as good, even though the market has been stagnant during this intermediate uptrend.
LONG-TERM TREND
The market’s long-term (i.e. major) trend is up, which means this is a bull market. Over 90 percent of the more heavily traded stocks have entered long-term uptrends and gone above their 200-day moving averages. 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 longer-term investing should have been carried out during the last intermediate downtrend, as suggested earlier. Portfolio additions – if not fully invested already – should be now attempted only after the next intermediate downtrend. Current long-term portfolios should be held on to.
GLOBAL PERSPECTIVE
A majority of global markets are still in intermediate downtrends. The Hang Seng and the sensitive index are among the few which have recently started uptrends. Shanghai did not enter a downtrend at all.
The US and European indices do not look like they are on the verge of starting new intermediate uptrends. The Dow would even fall to a two-month low if it drops and stays below 8,150. A strong downtrend in the Dow could eventually hit markets which are doing reasonably well as of now.
The BSE Sensitive Index had gained 12.0% in the twelve months that ended on Thursday, keeping it at the 3rd place among 35 well-known global indices considered for the study.
Shanghai heads the list with a 13.2% gain. Chile, the sensitive index, Turkey and Sri Lanka follow. The Dow Jones Industrial Average has lost 26.6% and the NASDAQ Composite lost 20.0% over the same period. (These rankings do not take exchange rate effects into consideration).
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