Sep 1, 2001|
Searching for the bottom
Yet another week the benchmark indices headed southwards, as the bears tighten control. Adding to their strength is a string of not so good news on the economy and political front and poor visibility on any indications of a turnaround. With the U.S economy struggling to find a bottom the markets are finding no reason to cheer.
The Index of Industrial production (IIP) weakened for most of 1QFY01 compared to the same period of the previous year. The Centre for Monitoring the Indian Economy (CMIE), over the next week, will release IIP numbers for the month of June. Although the number is likely to weaken YoY the important figure to look out for would be month on month sequential movement. This could signal a continuing slowdown or a likely bottoming of the economy.
As mentioned in our morning notes (Pre-Open) the market headed for the lower band of the trading range created over the past month. The support, the Sensex was attracting at the higher 3,200s (3,270 level) was broken in yesterday's trading and has approached a fresh support level. Adding to the technical weakness, the Sensex has not been able to cross the 30-day moving average (DMA) since mid-July'01. More distressing news could send the markets to the lows touched in April'01 (3,180 levels). This could most likely lead to a new lower trading band for the Sensex.
The sentiment in the U.S markets too has reached a nadir seen in the month of April '01. The Dow Jones has broken 10,000 and the NASDAQ 1,800. With signs of the economy bottoming still eluding, the markets grudging but steadily are approaching the yearly lows.
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