The market has moved beyond 11,000 on six occasions after May 18, but has not been able to sustain the rise till the end of the day.
MUMBAI: The markets closed on a promising 200-point winning streak on Tuesday. In the bargain, the Bombay Stock Exchange Sensex ended above the 11,000 mark for the first time since May 18, 2006.
So are the bull times back? Trendwatchers are still keeping their fingers crossed, since the market has moved beyond 11,000 on six occasions after May 18, but has not been able to sustain the rise till the end of the day. “The market made a strong move on Tuesday, but it will take at least another day to assess whether or not we are back in a bull market,” says Deepak Mohoni, managing director of trendwatchindia.com.
“The entire move of the last month has followed the global trend, and we should, therefore, give it one more day to see how global markets react to the US Fed chairman’s statement on interest rates,” he adds.
A technical analyst from a local broking firm, who did not wish to be named, said that if the Fed does not raise interest rates on Tuesday night, the markets may see 11,350 levels on Wednesday. “There will be an attempt to go higher, but no clear trend has formed as yet,” he says. However, if the Fed raises rates, then the Sensex may well go down to 10,500 levels in the next few days.
The key signal being looked for is not the rate itself, but clues to the Fed’s stance on the future. If the statement seems to suggest that rate hikes may not be necessary, the markets will head for a relief rally. Turn to Page 20
“11,000 is just a number and doesn’t mean much. If the outcome of the Fed meeting is positive, one might see the Sensex moving up 150-200 points on Tuesday, but it is difficult to sustain at these levels,” says Ambareesh Baliga, vice-president of Karvy Stock Broking. “There is hardly any participation in the market. When there is no conviction that it will go towards the 12,000 mark, why would people buy?” asks Baliga.
On Tuesday, the combined cash market turnover on the main exchanges recorded its second-lowest level for the year at Rs 6,426 crore. The daily average turnover for August has also been low at Rs 7,454 crore.
Tuesday’s Sensex close, at 11,014.97, is up 2,086 points from its recent low of 8,929.44 registered on June 14, 2006. Since then, investor wealth has gone up by Rs 4.65 lakh crore to touch Rs 27.72 lakh crore on Tuesday. Over the same period, foreign institutional investors have been net buyers by Rs 1,497.5 crore, and mutual funds were net sellers by Rs 206 crore. In the run down from the Sensex’s May 11 peak of 12,612 to its nadir on June 14, the slide was led by metal and capital goods shares.
In the rise since June 14, the cheerleaders have been IT and technology shares.
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