| The Sensex was up 9.18 per cent at 16,371.29 points. The Defty was up 9.67 per cent as the rupee strengthened. The FIIs were net buyers through the first four sessions and sellers on Friday while domestic institutions were generally net sellers. |
| Background indicators were not that strong though advances outnumbered declines and prices of smaller stocks outran the megacaps. The BSE500 moved up 9.27 per cent and the Nifty Junior shot up 11.65 per cent. |
| However, while the price recovery was impressive, volumes were tepid, especially given that this was settlement week. Low volume is usually a signal that a price rise is unsustainable. |
| Outlook: The market may swing down towards support at Nifty 4650 and it is unlikely to be able to clear stiff resistance in a band between current prices and 5050. However, it seems as though the intermediate trend is no longer bearish though the long-term trend still is. |
| Rationale: A sharp price rise that is not backed by volume is a technical rally rather than a bull run. The market has been down since mid-January and it seems that the first powerful wave of a new bear market is over. The 200 DMA is trading around 5050 at this instant and prices are unlikely to move past that. |
| Counter-view: If we ignore the volumes, the price line would suggest that there is room for a rise till Nifty 5300. This can only happen if volumes improve dramatically. The positive signals would be a 25-30 per cent rise in daily volumes coupled to Nifty closes above the 5050 level. |
| Bulls & bears: Short covering obviously played a big part in the rally. Some of the sharpest turnarounds came in sectors where stocks have been hammered earlier. For example, banks, real estate (Unitech, Parasvnath and DLF were all up) and IT (Wipro led the way) were up. |
| Specific metal stocks also saw a spike with Tata Steel and Sterlite doing well after a massive sell off in the past couple of weeks. Pharma shares such as Dr Reddys, Divi |
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