Downtrend May Continue

Though the market looks positive in the short-term, the rise may not be sustainable

War fears continued to plague the markets and the weak growth in the US during the previous quarter also dampened spirits. A small recovery on Friday didn't really alter the trend. The Sensex ended down 1.14 per cent at 3250.38 points. The Nifty was off by 1.34 per cent at 1056.05.

Market breadth wasn't too good and advances were outnumbered by declines through the week. Volumes were lacklustre. The Defty was buoyed as usual by the strong rupee losing only 1.04 per cent. The broad S&P 500 Index was down by 1.5 per cent.

Outlook: The addition of new stocks to the derivatives list could pump up volumes next week. Both major indices also completed a double bottom on Friday and this is a short-term positive. There could be a further rise on Monday/Tuesday to around the 3290 Sensex levels. But any rise looks unlikely to be sustained. Expect support again between 3165-3200 in the next fall.

Rationale: The market is definitely in an intermediate downtrend and it probably won't change direction until the Iraq situation is resolved and the Budget digested. The drop of the Nifty to its support at 1026 breached the 200 DMA