Lacklustre Trading Continues

The week began with little bull fervour and an undertone of nervousness. Despite the new account in BSE, FIIs were fence-sitting while LIC was the only active domestic institution.

The disappointing trend in corporate working combined with fears of the petro hike. Political uncertainity also reared its ugly head again as the Bofors and Fodder Scam chargesheets came closer to being filed and panic set in the ranks of the JD and Congress.

The Sensex dipped to close at 3735.25 points which was a 34.09 point loss on last Firday's values of 3769.34 points. The Nifty also moved down closing at 1040.50 points versus its earlier levels of 1053.35 points.

 

Tuesday saw FIIs cutting their losses in Century and Grasim on disappointing results. There was widespread hammering as the market displayed increasing nervousness about the extent of the "modest petro-hike".

It was also settlement day at the NSE so prices fell further as tired bulls unloaded. The sensex dipped below 3692 before pulling back slightly to close at 3701.96 points. The Nifty ended at 1031.05 points

Wednesday saw a technical pullback on short covering on the BSE coupled to new account buying on the NSE. The BSE also saw the return of some domestic and foreign institutional buyers.

Bajaj Auto rose on rumours of a 1:1 bonus although the ratio was later toned down by company sources. Midcaps in the B1 group also saw investor support. The Sensex recovered ground to close at 3740.53 points after dropping to an intra-day low of 3652.20 points. The Nifty had a perceptible rise to the 1041.65 level.

Thursday saw peculiar fluctuations especially in the ITC scrip. This was apparently bought heavily by some FIIs. These purchases more than matched earlier profit-taking and the tobacco scrip ended with gains as did Hind- ustan Lever.

Other pivotals saw less action and the BSE Sensex remained close to its previous levels closing at 3741.22 points. The Nifty was held at exactly 1045 points.

On Friday ITC continued its remarkable bullrun and even topped the turnover on the NSE which is rare for any scrip other than Reliance or SBI. Telco saw a firming up while Bajaj Auto was sold heavily by punters who were disappointed by the lower bonus ratio.

The Nifty registered moderate gains at 1048.40 points while the Sensex rose to

The week saw moderate losses in most pivotals though things could have got a lot worse if the downtrend of Monday and Tuesday had not been halted.

The Nifty ended the week down 0.47 per cent while the Sensex lost 0.26 per cent. The BSE -200 actually gained 0.12 per cent and so did the Dollex which went up 0.20 per cent in the last week.

This reflected better sentiments in B1 midcaps as well as the Rupee strengthening versus the dollar.

Volumes remained poor to moderate throughout the week and the Advance decline ratio was also none too good.

The bulk of the market remains untraded although snetiment seems to have improved in selected midcaps. The BS midcap index gained just one per cent, reflecting just how low the sentiment in the markets was.

Technically the market seems to be in an intermediate downtrend as it has registered lower bottoms this week with an intra day decline to 3652 points.

It is currently in a weak short term uptrend with massive resistance between 3750 points and 3835 points.

The long term trend of the market is still apparently positive. The sensex has found support above 3650 which is the upper end of the most key tradinbg range of 3575-3650.

The Sensex has traded through that barrier every time it has had a major reversal in the last three years.

Buying support above that zone implies that the bullishness generated by the Chidambaram Budget has not yet dissipated despite the many hiccups since then.

From the strictly financial point of view, there is enough liquidity in the system with call rates reasonable and dipping short-end interest rates,.

But the inferior corporate results of 1996-97 coupled with the petro-hike and continuous political instability could be a poisonous combination.

If the market dips below 3575 again, life could be nasty, brutish and short for the optimistic bull.