The optimists' hopes were dashed by the telecom scandal combined with events in Gujarat. The degradation of the Industrial Production index growth rate in the first quarter of 1996 also led to much corporate gloom. The long term benefits from a cut in lending rates haven't yet made an impact.
The exit of big bears has switched the short-term trend sideways. The intermediate te-rm signals look worse. But a clear judgement on intermediate trend doesn't seem possible.
The Sensex has support around the current levels of 3340 points. Most of the movement was centred here. Thus, although earlier support at the 3450 level will now act as a resistance barrier, the sensex is still held above its previous bottom of 3280 points. If it rallies from 3340 upwards, the intermediate trend will be deemed positive. A breach of 3280 will pull the index down to 3150 points and drag the intermediate trend down.
The Sensex ended at 3346.78 which was a miniscule 0.02 per cent below last week's close of 3347.37 points. The National Index however produced a negative divergence ending with a much larger loss of 1.19 per cent. The Dollex posted a 0.47 per cent loss as the rupee gained a little, while the BSE200 ended 0.61 per cent down.
The broadest Allshares Index dropped to a new two year low losing 1.72 per cent. The Weighted Medium cap index lost 2.53 per cent and the Smallcap index lost a larger 1.21 per cent. The advances versus declines ratio stayed down at 1589 minus, versus 751 plus, with 236 scrips holding value. This was a definite signal of worsening intermediate term prospects.
The long term trend remains clearly negative. No assessment can change unless either the 3575 or the 2820 level is breached. The 3575point is the minimum rise needed to signal a new bull market. font>
