Reaching For The Sky
The market moved up strongly through the week after a quiet start. FIIs returned to the bourses in force. Throughout the week they made purchases in heavyweights and also selectively targetted software and oil stocks, presumably in anticipation of another oil hike. Indian institutions also turned bullish during the week. Operators have been further cheered up by the prospect of another apparently normal monsoon.
Monday saw a firm undertone despite a small loss from the closing values of last week. The Sensex dropped to a low of 3815.73 points before pulling back to a closing level of 3835.35, less than 2 points away from Fridays level. This was the opening day of a new BSE settlement and sentiments may have been dampened by higher carry forward charges at 18 percent. The Nifty reflected the quiet trend with a move down to 1074.65 points.
Tuesdays focus was on oil and refinery scrips with HPCL, Cochin Refineries and IPCL all being the centre of attebtion. Glaxo and Bhel also made advances.THe FIIs return to bullish mode was very noticeable. The NSE saw very narrow range trading on settlement day ending with 1081.10 points. The sensex closed at 3860.97 which was a significant advance as it came in the face of some heavy hammering.
Wednesday saw the breaching of the 3900 barrier as the market was fuelled by allround institutional support and the Sensex rose to close at a high of 3927.71 points. The Nifty climbed a commensurate amount to hit 1104.60 points crossing the 1100 mark. Tata Power made a sharp climb on investment support, while short -sellers closed out their positions in Tisco leading to a strong rally there as well. Ranbaxy, MTNL and HPCL saw a lot of activity as did ITC and Reliance.
Thursday saw the Sensex surge ahead by another 55 points rising to 3982.95. The Nifty rose to 1120.70 points and trading was brisk on all the bourses. The main interest was concentrated in heavyweights, though with FIIs cornering ITC shares and Reliance was also targetted by bulls hoping for a bonus. Levers and Tata Tea saw plenty of enquiries as well, following its excellent results.
On Friday, the 4000 point barrier was crossed for the first time in three months. The Sensex ended at 4029.99 points while the Nifty closed at 1136.30 points after profit-taking pulled it back from 1147.50. ACC, Reliance Capital and Colgate saw gains while HPCL witnessed profit-taking after rising through an excellent week.
The Sensex gained a whopping 5.04 per cent from last weeks levels. The Nifty gained an equivalent 4.94 per cent. Broader indices like the BSE-200 and Dollex gained 4.82 and 4.7 per cent respectively after massive RBI intervention kept the rupee from appreciating.
The market broke several critical resistance this week. The rise came on reasonable volumes although there was a spectacular rise only on Friday. This confirms the bullish rise in share prices have come on actual demand rather than narrow speculation.
The breakout past the 3900 barrier followed by the explosive rise past the 4000 barrier were thus not marred by negative background signals.
With this weeks trading pattern, the market trends have moved in phase. The short term trend was obviously up, so was the intermediate trend which established a pattern of rising tops. The long term trend is also up, as it has been since early December 1996. There ought to be a pullback in the short-term trend early next week however, since the market appears overbought on the 10-14 day timeframe.