Sensex rebounds from below 200-day average

Sees roller-coaster ride on huge selling by FIIs.

After falling below the 200-day moving average following heavy selling by foreign investors, worried that the global economic recovery would wane as European nations stepped up measures to reduce fiscal deficits, India’s benchmark stock indices recovered sharply in the late afternoon trade.

At the close, the benchmark Nifty-50 closed at 5,059.90, down 33.60 points (0.7 per cent) and the Sensex was 159.04 points (0.9 per cent) lower, at 16,835.56. The 200-day average for the Sensex was 16,719.83 and the intra-day low was 16,551. The Nifty touched a low of 4,966.25, below its 200-day average of 4,985.15.
  

SLIGHT RELIEF
(As on May 17, 2010)	Current  close	200-day  mkt avg	Change  %
SHANGHAI SE	2,559.93	3,074.03	-16.72
HANG SENG	19,715.20	21,208.69	-7.04
CAC 40 *	3,594.11	3,790.80	-5.19
BRAZIL BOVESPA (May 14)	63,412.47	64,731.79	-2.04
NIKKEI 225	10,235.76	10,348.30	-1.09
SENSEX	16,835.56	16,719.83	0.69
FTSE 100 *	5,324.76	5,273.62	0.97
S&P CNX NIFTY	5,059.90	4,985.15	1.50
STRAITS TIMES	2,833.69	2,773.12	2.18
MSCI EM ASIA (May 14)	395.79	387.25	2.21
DOW JONES (May 14)	10,620.16	10,234.37	3.77
DAX *	6,143.05	5,762.23	6.61
* Till 17.00 IST                                                                            Source: Bloomberg

Motilal Oswal, chairman MOFS Ltd, said: “The Indian market is moving in line with global markets and global jitters, which are unpredictable, would also affect India. However, at lower levels, the impact on India will be much less, as its fundamentals are sound.”

Many other emerging markets are trading much below their 200-day moving average. China is trading 16.7 per cent below that level and the Hong Kong market is 7.04 per cent lower. Brazil is also trading at lower than the 200-day average.

Ashish Shroff, technical analyst with Ambit Capital, said: “The 200-day moving average is an important indicator for the long-term trend. If the market doesn’t close below that, it indicates the bull run is intact but the market may be consolidating. However, even if the market closes below that, it has the potential to reverse the trend.”

However, Vijay Bhambwani, CEO, bsplindia.com, said the “Indian market technically looks bearish and it may enter a bear phase if indices close below crucial technical supports”.

Major contributors to the Sensex’s 159-point fall were Reliance, Infosys and TCS (the latter two down on the fear that their European businesses would be affected), and two leading private sector banks, ICICI Bank and HDFC Bank.

DLF and Reliance Communications tanked on poor results today. Larsen & Toubro was up nearly 5 per cent to Rs 1,605.55 on good results, helping the indices to limit losses.

Investors abroad today sold shares worth Rs 1,224.29 crore on a net basis. The net of their total sales in May has been Rs 5,887 crore down.