The Hindu Business Line : Bull run seems to be on course

THE bull run seems to be on course. Last week, the market bypassed a correction on strong liquidity support and buying by operators, a few hedge funds and a string of corporates.

With just two sessions left for 2002, the market this week will, however, open with short-term concerns over Iraq-US stand off, North Korean manoeuvrings and the rising crude prices over the continuing Venezuelan strike.

While the BSE Sensex closed at a seven-month high on last Friday, the Nasdaq Composite finished weak. At home, the failure of the Cabinet Committee on the Disinvestment to decide on the privatisation course for Hindustan Petroleum Corporation and Bharat Petroleum Corporation on Friday is likely to affect the sentiment for the PSU stocks as a whole.

However, the Kelkar Committee proposal for doing away with the long-term capital gains tax and dividend tax may have a positive effect on the market psychology. The market operators also would like to bet on the Reliance counter for the group's future plans.

The manoeuvrability of the speculators will be crucial this week. The indications are that the retail investors have more or less been cautious during the current bull run continuing since November.

The question arises whether any operator-driven bull run in the market is a suspect. Of course not, if one can trust that the market regulator is vigilant. The small investors have been trapped time and again by the big and the not-so-big bulls by defying gravity and propping up key indices artificially.

Thus, the end justifies the means in the domestic stock market as long as the going is good. The maxim — buyers beware — seems to be been understood the hard way by retail investors after two multi-crore scams in the recent past.

According to Mr V.K. Sharma of moneypore.com: "Unless the Sensex breaches down the 3,360 support level, there is no threat for the current rally. The next support is available at 3,301''. In his opinion, the bear zone begins below this level. "The technology stocks, which have largely led the current rally in the domestic market cannot keep on running if the US markets slides. The Indian IT stock would require some support from the Nasdaq in defying a correction'', he added.

The current rally has given the Sensex a gain of 570 points from the low of 2,828, recorded on October 28. During 2002, the benchmark index appears to be performed better than the last year. The Sensex (till Friday) is up by 136 points as compared to 2001 year-end closing figure of 3,262. However, it is down by 360 points from the year's high of 3,758.

The downward journey of the Sensex from the year-end closing of 5,005 points in 1999 has been quite turbulent and painful for many investors. The beginning of 2003 may bring cheers to the investors with a long-term view doing good homework.

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