Long-term market trend still in upmode

The stock market swung both ways again last week, but with somewhat larger falls than rallies. The Sensex ended the week 0.65% or 113.58 points lower, and the Nifty 0.61% down. The CNX Midcap Index managed a gain of 0.37%.

ONGC was the biggest winner among index stocks with a 3.3% gain. The other index stocks to go up included NTPC,Reliance Infrastructure, Larsen & Toubro and Hindustan Unilever with gains between 3.1% and 1.0%.

Sterlite Industries was the biggest loser among index stocks with a 4.5% loss. The other index stocks to go down included Jindal Steel & Power, Tata Steel, Hindalco and Cipla with losses falling between 4.3% and 2.9%.

HPCL was the biggest winner among the more heavily traded non-index stocks with an 18.6% gain. The other non-index stocks to go up included VIP Industries, Resurgere Mines & Minerals India, TVS Motor Company, NHPC, Aban Offshore, Insecticides India and Reliance MediaWorks with gains between 12.8% and 7.5%.SEL Manufacturing was the biggest loser among the more heavily traded non-index stocks with a 12.8% loss.

The other non-index stocks to go down included TTK Prestige, Aegis Logistics, Edelweiss Capital, MMTC, Sesa Goa, Cairn India and United Phosphorus with losses falling between 8.7% and 4.9%.

INTERMEDIATE TREND: The market is now in a confirmed intermediate downtrend, which has been on since June 21 with the Sensex topped out at 17,920. The Sensex would start a new intermediate uptrend if it climbs back above 17,800. The equivalent trigger level for the Nifty is 5,350, and that for the CNX Midcap Index is 8,200. (Figures rounded up to the nearest 25).

Almost all the global markets are now in intermediate downtrends, and a global downtrend is on. A majority of indices have fallen to multi-month lows, and our indices are in a relatively better shape by ending the week at one-three week lows.

LONG-TERM TREND: The market’s long-term trend is still not down, as the indices have managed to maintain a sequence of rising intermediate tops and bottoms, barring the last intermediate top which was a whisker below the preceding one for the Sensex and the Nifty. However, the CNX Midcap Index has a higher top. These tops and bottoms have been just 2-3% above their preceding ones, and the long-term trend is best interpreted as sideways, starting in September last year.

The Sensex would enter a bear market if it falls below 15,300, the Nifty under 4,500, and the CNX Midcap below 6,350. The lowest of the last three intermediate bottoms for the indices has been taken as their bear market trigger, in keeping with the sideways long-term view.

This is no longer a broad-based bull market, as nearly a third of the more heavily traded stocks are in longer-term downtrends. The number has been increasing with each intermediate downtrend.

Regards,
Free Indian Stock Tips Team