Major Indices:: Sensex : 16339 :: Nifty : 4864
Intermediate Trend :: Bearish
Key Technical Levels :: 17258- on the upside :: 16164- on the downside
The intermediate downtrend started in the Sensex from the recent high (21206) is intact and is in good force. As on date, the Sensex has not yet shown any “strength” to reverse the downtrend. A “close” above 17258 is must for a much needed breather for the bulls (i.e. close above the recent falling gap of 17227-17258), or else it may continue to drift downward.
Since the beginning of the bull run in the year 2003, the Sensex has invariably taken a support on the rising trend line (drawn on the monthly chart, see below) in the month of May/June, every year. In this year, it has swiftly tested this long term support line, once in Jan 08(15332) and now again, yesterday (16287). This re-visit is significant, as far as, long term bullish trend is concerned. If the Sensex fails to hold above 16300-16500, in this week/month, we may witness a sever fall in the coming months, which could alter all the equations for the Indian Equity markets, for the near term.
Whether it will hold? The global scenario is pointing towards otherwise.
ASA World Index :
The global scenario looks more bearish as the “ASA” world index has already broken the equivalent monthly parallel channel in the month of January 2008.
We may witness a continuation of the prevailing bearish trend in the “Dow”, “FTSE 100”, and “HangSeng” in the near future.
BSE Capital Goods Index : (14822)
The Capital Goods index is the clear “flag” bearer of the bull run, since 2003.
The long term outlook for the index is very similar to that of the Sensex, and the rally from the low of 765 (Nov 02) is perfectly in the upward rising parallel channel. Any decisive downward breakout from the channel is likely to halt the bull run in the capital goods stocks for the next few months/year.
The value of the lower trend line is placed at 14344. Watch L&T, BHEL, and ABB, closely to get early clues on the index.
