The bulls have seen to be stock specific, and at the right places, to keep the index up. Let me extrapolate. The top 5 scrips that affect the movement of the Sensex the most are (weighted) Reliance Ind, Infosys, ICICI Bank, L&T and HDFC. Now let us see how they have fared:
- Reliance Industries Ltd (up from 1980 to 2140) 8%
- Infosys (up from 2223 to 2266) 1.4%
- ICICI Bank (up from 744 to 835) 12%
- Larsen &Toubro (up from 1568 to 1628) 3.8%
- HDFC (up from 2461 to 2521) 2.4%
The other scrips that have less weights on the Sensex have not fared quite well. The same holds with the Nifty50. Two things are possible from here on. Either the markets break out of the current levels- chances of which, i think are bleak. The second, and more probable case is that the markets would be shedding most, read most, of their recent gains.
The stocks that can go down now big time may not include all the 5 mentioned above. RIL has been quiet for some time, and now it can drive the markets. Infy has a lot of good news coming in. ICICI may see some selling in the week ahead, and HDFC may hold still. We foresee a 250-400 point correction on the Sensex in the coming week, which may also be recovered in the week as well. If it does not get recovered, the September series may close in the green after a bear ambush AND the markets would become normal. If it recovers, then there is a case for a sharper fall in the later half of the month, with Sep being in the red.
The first case, again. If it breaks out of this trend, we see some higher levels for a while, and then a deeper correction- sensibly talking, the markets cannot just sustain this rally the way it has in the past week if some major buying doesn't happen. The broader market may also find some resistance for a while, and will be guided by the major Indices (ie the Sensex and the Nifty).
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