The Hindu Business Line : Positive undertone prevails

As anticipated in this column, the mid- and small-cap stocks improved lot better than the heavyweights. The BSE Consumer Index, representing the mid- and small-cap group of equities, led the pack of indices with a gain of over 12 per cent. The CNX Midcap and the BSE Capital Goods Index followed closely with rise of 8.3 per cent and 7.14 per cent respectively. In comparison, the Sensex appreciated 4.69 per cent and the S&P CNX Nifty 5.36 per cent. The broad-based index, S&P CNX 500 performed better and shot up by almost 6 per cent.

On April 1, FII net investment figure was at Rs 3,490.40 crore, arguably the highest ever single day figure, thanks to ONGC's new stock listing. The all fools day saw the Sensex climb significantly by 150 points.

Tarry a little: But, is it an invitation to a non-existent party in the near future? (King Charles IX sent foolish gifts and invites to non-existent parties to those, who opposed his changing of calendar, and began the tradition of fooling people way back in 1852.)

The technical evidences suggest a resumption of the medium to long-term upward journey. However, according to chartists, not all the hurdles have been cleared. So, corrections, from time to time, will of course be part of the game.

This week, market may remain firm. The volumes and the breath are likely to be better. However, the caution will remain the watchword. In a condition like this discerning investors look for good quality stocks and use the corrections for entry.

In case of the Sensex, the zone of around 5,800 and for the Nifty, the level around 1850 points are expected to be strong barriers and need to be crossed decisively for onward movement. The next levels of resistances are seen on the charts for the Sensex between 5900 and 5950 points and 1900-1905 for the Nifty. After that, the earlier tops of the both the major indices would be in sight.

However, the downhill slide cannot be ruled out altogether at this juncture. (After all, in mountaineering and stock market, the climate and political weather are most unpredictable.) In the event the market declines, the Sensex is supposed to find support at 5650 points level and followed by one at around 5550 points area.

The domestic funds have remained net negative even on the first day of the new fiscal. The retail investors are still in the waiting room. The euphoria over the third quarter GDP growth of 10.4 per cent, highest among the emerging markets including China and the Central Statistical Organisation prediction of the 8.2 per cent growth in 2004-05 may be overshadowed by any change in one of the other important indicators. For example, the strong crude price, stronger rupee or unemployment scenario (though reliable data on this count is hardly available) or inflation figures or a growing cold war between the corporate world and the establishment over the fee cut at the IIMs may mar the positive sentiment. In a time, when the nation is on an election mode insignificant things tend to get overblown.Apparently, quite a few sectors look positive before the fiscal-end results. However, the market is in search of a pivotal to rally round. The next lap of bull run would look forward to some such equity leaders to cheer up and benchmark the market. The likes of Reliance, Tata Steel, HLL, ACC have had their turns in the history of the domestic market. Possibly, The Tata Motors, ONGC and SBI counters are in the making for a new leadership in the coming quarters.

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