Invest after select sectors show signs of bottoming out: Deepak Mohoni
The stock market got some respite last week, with the Sensex finishing 0.78% or 147.09 points higher, and the Nifty 0.74% up. The CNX Midcap Index gained 0.06%. TCS was the biggest winner among index stocks with an 8.4% gain. The other index stocks to go up included ICICI Bank , Bajaj Auto, Mahindra & Mahindra and Cipla with gains between 5.5% and 4.1%.
Reliance Infrastructure was the biggest loser among index stocks with a 7.7% loss. The other index stocks to go down included ONGC, Larsen & Toubro, Tata Power and Hero Honda with losses falling between 6.3% and 3.4%.
Tata Coffee was the biggest winner among the more heavily traded non-index stocks with a 28.7% gain. The other non-index stocks to go up included LIC Housing Finance , Gitanjali Gems , Orchid Chemicals, Opto Circuits, Canara Bank , Bank of India and Rural Electrification with gains between 22.6% and 9.6%.
Ravi Kumar Distilleries was the biggest loser among the more heavily traded non-index stocks with a 14.3% loss. The other non-index stocks to go down included Exide Industries , Jet Airways , Hindustan Construction , Jindal Poly Films , Gail India, Jupiter Bioscience and Sintex Industries with losses falling between 12.9% and 6.1%.
INTERMEDIATE TREND:
The markets intermediate trend is still down. It began with the Sensexs January 3 peak of 20,665. The level to be crossed for an intermediate uptrend is now much closer at 19,175 for the Sensex, and 5,750 for the Nifty. The figure remains a more distant 8,450 for the CNX Midcap Index. (Figures rounded up to the nearest 25).
About half of the global ! indices are now in intermediate downtrends. We entered an intermediate downtrend when a global uptrend was on. The decline which halted last week could resume in earnest if a global intermediate downtrend were to develop now.
LONG-TERM TREND:
The markets long term trend has been signalled as down, which means that this could be a bear market in progress. The signal occurred when the Sensex closed below its last intermediate bottom of 18,950, Nifty below 5,690 and the CNX Midcap below 8,290. The CNX Midcap Index is below its 200-day moving average, and the Sensex and Nifty just above theirs. Doubts about the existence of a bear market will arise if the recent Sensex low of 18,779 is established as an intermediate bottom. The Niftys equivalent is 5,624, and that for the CNX Midcap index is 8,115. The milder bear markets in the past two decades have ended within three-six months of the bull market peak, and cost the indices no more than a 20-30% drop. The current decline is already two months old, and the main indices have lost just over 11% since the Diwali top. Most global markets appear to be in bull phases, but could also be seen as being in a larger sideways range.
TRADING & INVESTING STRATEGIES:
Investors who have a reasonably defensive portfolio may get away with another drop of 10-15% before prices start climbing again. This assumes that the bear market, assuming one is on, belongs to the milder variety. Additional investments should now only be made after select sectors start showing signs of bottoming out for the longer-term.
Reliance Infrastructure was the biggest loser among index stocks with a 7.7% loss. The other index stocks to go down included ONGC, Larsen & Toubro, Tata Power and Hero Honda with losses falling between 6.3% and 3.4%.
Tata Coffee was the biggest winner among the more heavily traded non-index stocks with a 28.7% gain. The other non-index stocks to go up included LIC Housing Finance , Gitanjali Gems , Orchid Chemicals, Opto Circuits, Canara Bank , Bank of India and Rural Electrification with gains between 22.6% and 9.6%.
Ravi Kumar Distilleries was the biggest loser among the more heavily traded non-index stocks with a 14.3% loss. The other non-index stocks to go down included Exide Industries , Jet Airways , Hindustan Construction , Jindal Poly Films , Gail India, Jupiter Bioscience and Sintex Industries with losses falling between 12.9% and 6.1%.
INTERMEDIATE TREND:
The markets intermediate trend is still down. It began with the Sensexs January 3 peak of 20,665. The level to be crossed for an intermediate uptrend is now much closer at 19,175 for the Sensex, and 5,750 for the Nifty. The figure remains a more distant 8,450 for the CNX Midcap Index. (Figures rounded up to the nearest 25).
About half of the global ! indices are now in intermediate downtrends. We entered an intermediate downtrend when a global uptrend was on. The decline which halted last week could resume in earnest if a global intermediate downtrend were to develop now.
LONG-TERM TREND:
The markets long term trend has been signalled as down, which means that this could be a bear market in progress. The signal occurred when the Sensex closed below its last intermediate bottom of 18,950, Nifty below 5,690 and the CNX Midcap below 8,290. The CNX Midcap Index is below its 200-day moving average, and the Sensex and Nifty just above theirs. Doubts about the existence of a bear market will arise if the recent Sensex low of 18,779 is established as an intermediate bottom. The Niftys equivalent is 5,624, and that for the CNX Midcap index is 8,115. The milder bear markets in the past two decades have ended within three-six months of the bull market peak, and cost the indices no more than a 20-30% drop. The current decline is already two months old, and the main indices have lost just over 11% since the Diwali top. Most global markets appear to be in bull phases, but could also be seen as being in a larger sideways range.
TRADING & INVESTING STRATEGIES:
Investors who have a reasonably defensive portfolio may get away with another drop of 10-15% before prices start climbing again. This assumes that the bear market, assuming one is on, belongs to the milder variety. Additional investments should now only be made after select sectors start showing signs of bottoming out for the longer-term.
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