Monday and Friday especially saw large intra-day corrections and huge volatility. On Monday, in fact, the market registered its third most volatile session ever. Prices swung through a 224 point range on Monday hitting a low of 3888 points before closing at 4039 points. On Friday, the market fell continuously mainly on profit-taking.
The BSE Sensex closed at 4015.75 point which was a 1.47 per cent drop. TheS&P CNX Nifty closed at 1145.85 which was down 1.70 percent. The BSE-200 ended down 0.39 per cent while the Dollex was off by 0.37 per cent. The rupee stayed stable and forward premiums also softened a little. The call money and badla rates remained low last week.
A look at outstanding positions also suggests that this 1000-point rally has actually been delivery-driven since they are quite low and show little change since three weeks ago when everything started. Low Badla rates also indicate that there hasn't been too much speculation.Other market indicators show that the rally remained a big-stock institutional move. The ratio of advances to declines never turned overwhelmingly positive while the pivotals shot up. Market breadth stayed around the 1200 actively traded scrips mark. Small investor driven moves usually see a sharp jump in breadth and very high advance-decline ratios while institutions concentrate on big liquid scrips.
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The BS-Midcaps 100 and BS-Midcaps 250 lost 3.04 per cent and 1.23 per cent respectively while the Smallcaps actually gained 1.16 per cent. This could mean the small investor is belatedly getting bullish just when the big players are pulling in their horns. This week the Sensex ranged between 3888 and 4197 points which is very high. Trading volumes remained appreciable although they declined a little from the previous fortnight. All these are signs of selling pressure which is still outstripping latent demand above the 4100 mark.
The market continued to register a bullish pattern of higher tops and bottoms and it tested support around the 3900 point rather than dropping further to a more reliable base around 3775-3850. This means that the intermediate trend is still, by definition, bullish. The next upside target if the trend remains northward bound would be the 4322 mark which was the top of April 1998.
If that 4322 top is decisively breached, say by around 5 per cent (4538 points), the market would then head for the all-time highs of 4643 and 4605 in September 1998 and August 1997 respectively. The current chart patterns suggest a target in the 4300-4400 range so it's anyone's guess whether the market will actually cross the 4322 barrier. The intermediate trend has actually been up only for three weeks since the bottom at 3183 on April 28,