THE stock market had a mixed week, with the Sensex finishing 1.11% or 215.41 points higher and the Nifty 1.03% up, while the CNX Midcap Index lost 0.05%.
ONGC was the biggest winner among index stocks with a 6.4% gain. The other index stocks to rise included Mahindra & Mahindra, Hindalco, Hindustan Unilever and Sterlite Industries with gains between 5.8% and 4.3%.
BHEL was the biggest loser among index stocks with a 7.7% loss. The other index stocks to go down included Infosys, Hero Honda, Larsen & Toubro and Reliance Communications with losses falling between 2.7% and 1.0%.
C Mahendra Exports was the biggest winner among the more heavily traded non-index stocks with a 15.0% gain. The other non-index stocks to go up included Indiabulls Financial, Lovable Lingerie, VIP Industries, Sintex Industries, HCL Technologies, Delta Corp and Zee Entertainment with gains between 10.3% and 6.7%. IRB Infrastructure Developers was the biggest loser among the more heavily traded non-index stocks with an 8.3% loss. The other non-index stocks to go down included GVK Power & Infrastructure, Unitech, Indiabulls Real Estate, Rural Electrification, Satyam Computers, IFCI and DB Realty with losses falling between 6.4% and 4.2%.
INTERMEDIATE TREND:
The existence of an intermediate downtrend was confirmed last week, even though the market has not been falling. The downtrend has been in existence since the Sensex made a peak at 19,811 on April 6.
The downtrend is likely to end soon, as the Sensex is close to the level of 19,750 which it needs to cross to confirm an intermediate uptrend. The Nifty?s equivalent is 5,925 and that for the CNX Midcap is 8,400 (figures are rounded up to the nearest 25).
Almost all the global markets were in intermediate downtrends entering last week, but the Dow, NASDAQ, and a couple of European indices ended the week with their intermediate trend up again, raising hopes of a global uptrend.
LONG-TERM TREND:
Our market?s long-term (major) trend is up, which means that a bull market is on. The Sensex and the Nifty are above their 200-day moving averages, while the CNX Midcap has still to do so. Around 40% of the more heavily traded stocks are above their 200-day averages. The main indices have so far managed to stay above their long-term averages despite the intermediate downtrend.
The bull market started on February 11 when the Sensex bottomed out at 17,295. The index has made larger gains than most other markets since then. About 30% of the more heavily traded stocks are above their last intermediate tops.
TRADING & INVESTING STRATEGIES:
Existing portfolios should be held on to as we are in a relatively new bull market. Even the more volatile stocks are relatively safer for now, as the bull market has reduced the market risk.
Further investments can be made now as the intermediate downtrend has run for about two weeks. The correction has been a mild one, and waiting for lower levels may not work out.
GLOBAL PERSPECTIVE:
The US indices and some of the European ones are back in intermediate uptrends, though a majority of the markets are still in downtrends. The Dow closed at a new bull market high, and its best level in nearly two years. It will fall into a downtrend again should it decline and remain below 11,548.
Most global markets are also in bull phases. Japan and Brazil are among the very few important markets that are in bear phases. The Dow would go into a major downtrend if it were to breach 12,000.
The Sensex gained 11.5% in the twelve months that ended on Thursday, down two positions to the 17th place among 35 wellknown global indices considered for the study. Sri Lanka continues to head the list with an 82.9% gain. Argentina, Indonesia, South Korea and Chile follow. The Dow Jones Industrial Average has gained 12.3% and the NASDAQ Composite has gained 12.0% over the same period. (These rankings do not take exchange rate effects into consideration).
(The author is an independent technical analyst)