Heading for a global bull phase

20 Apr 2009,


The market rose further last week, with the BSE Sensitive Index finishing 2.03% or 219.23 points higher, and the Nifty 1.27% up. The CNX Midcap Index was the outperformer this time, gaining 4.79%. State Bank was the biggest winner among index stocks with a 14.6% gain.

The other index stocks to go up included ICICI Bank, Bhel, Sun Pharmaceuticals and HDFC with gains falling between 11.0% and 5.3%. Hindalco was the biggest loser among index stocks with a 6.7% loss. The other index stocks to go down included TCS, ONGC, Infosys and Ranbaxy Laboratories with losses falling between 5.0% and 2.2%.

Rolta India was the biggest winner among the more heavily traded non-index stocks with a 32.7% gain. The other non-index stocks to go up included IOB, Unitech, Bajaj Hindusthan, Lanco Infratech, S Kumars Nationwide, Essar Oil and Canara Bank with gains falling between 27.8% and 17.7%.

Akruti City was the biggest loser among the more heavily traded non-index stocks with an 18.5% loss. The other non-index stocks to go down included Ashok Leyland, Aptech, Reliance Industrial Infrastructure, Videocon Industries, Jet Airways, JSW Steel and Mercator Lines with losses falling between 14.3% and 8.3%.

INTERMEDIATE TREND

The market remains in the intermediate uptrend which started on March 6 from the Sensitive Index’s low of 8,047. The level below which the uptrend would end are still 9,521 for the Sensitive Index, 2,962 for the Nifty and 3,248 for the CNX Midcap Index. These will be revised upwards to the point where the next minor decline ends. Global markets are also in intermediate uptrends.

LONG-TERM TREND

The market’s long-term trend is now almost certainly up, with the Sensitive Index and the Nifty climbing out of the range they had been since the end of October. Specifically, the Sensitive Index has risen past 11,000 and the Nifty has cleared 3,250 - these were the upper ends of the sixmonth long range.

The CNX Midcap index is very close to 4,000, the level it needs to cross to enter a major uptrend like the main indices. Once this is done, a bull market would be confirmed.Over 70% of the hotline stocks made 10-week highs or better during this rally, and almost 40% are above their 200-day moving averages.

We are almost certainly in a new bull market, as defined by a rising long-term trend. This is evinced by the fact that the index has risen over 40% since its October bottom of 7,697. However, it is still too early say how much further the market would rise and for how long.