Financial Daily from THE HINDU group of publications
Monday, Dec 02, 2002
Financial Daily from THE HINDU group of publications Monday, Dec 02, 2002 |
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Markets
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Stock Markets Columns - A Ringside View Market looks overheated; but bulls may charge ahead Jayanta Mallick
THE stock market appears interestingly poised this week. The BSE Sensex recorded a gain of 87 points or 2.78 per cent. The BSE IT index rose by 23.83 per cent. The BSE indices for consumer durables, pharmaceuticals and even for PSUs improved. The market appears overheated and overbought after five weeks of rally, which saw the Sensex gain 14.15 per cent from the level of 2,828.48 on October 28. A noticeable profit-booking spree — call it a cooling off or a technical correction — may be overdue. The question is whether the bulls would be able to help the benchmark index — Sensex — catapult to the next orbit above the 3,700 - 3,800 level as the technical analysts suggest? Will they be able to garner enough funds to produce the decisive thrust? And most importantly, will they be able to pull off a sustained rally without raising regulatory eyebrows? The crucial factor will be the liquidity play this week. If buying continues the market may bypass a correction this week also and more of the second and third tier companies may join the rally. However, if there is a negative development — be on the domestic or international front — the indices may retrace quickly. The market had seen the last long rally — an 11-week affair — between September 28 and December 7, 2001. The index had galloped 836 points or 32 per cent. According to a section of brokers and analysts, the five-week rally is nothing unusual. "There have been 14 rallies on the BSE since January 1, 1990, with a duration of five weeks or more. The profit-taking could be an intra-day affair this week and market as a whole may surge along," observed Mr V.K. Sharma of Anagram Stockbroking. According to Mr Saumil Trivedi, a technical analyst, the build-up so far has been very strong. "The Sensex this week is likely to consolidate between 3,380 and 3,200 before making further strong advance," Mr Trivedi added. According to him, the significant feature last week was the nature of minor correction on Wednesday after 8 consecutive daily upticks. The fact that the index remained above 3,098 was significant from the technical point of view.
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