The current intermediate downtrend will decide the fate of the major trend of the market. If the Sensex is able to stay above the 3491 level in the current intermediate downtrend, there is a good possibility that the major trend of the market will be up if the Sensex makes a higher intermediate bottom. In the earlier intermediate rise, we saw that scores of stocks have moved past their earlier intermediate tops. Their respective 200 DMA In the current intermediate downtrend, the new economy stocks have taken a beating and as majority of these stocks were already in an intermediate downtrend, these stocks will continue to lag behind in the bull run. Hence, investors have to concentrate only on those stocks which are have bottomed out and wait for the current intermediate downtrend to terminate and add to the long positions only in those stocks and sectors which are exhibiting a signs of a bullish relative strength. Till such time, do not try to pick bottom as the intermediate downtrend could continue for awhile and investors will see lower levels in many stocks before they see the upward moves.Today I will take a look at the private sector banks wherein many stocks have moved well above the 30 WMA and are also correcting themselves in the current intermediate downtrend.
Federal Bank
Federal Bank moved past the earlier intermediate top and its 30 WMA in the earlier intermediate uptrend and after making a high of 68.50, the stock has been in an intermediate downtrend as it pulls back towards its rising 30 WMA. If the major trend of the stock is up, it is likely to take a support at this long term moving average in the current intermediate downtrend and start moving up. Thus, investors must wait and watch the stock towards its 30 WMA and get into it in the next intermediate rise if the stock bottoms out above its 30 WMA. The volumes have been low in the earlier intermediate rise, which is not a bullish sign.
Global Trust Bank
Global Trust Bank was one of the few private sector banks, which were the first to go into a major uptrend. The stock has been exhibiting rising major tops and bottoms which is a very bullish sign. After attaining a high of 114.7, it stock has been in an intermediate downtrend and is no where close to its 30 WMA. The trading volume in the earlier intermediate rise were quite large suggesting that the bulls were quite strong in the earlier intermediate uptrend. It is now to be seen if the stock bottoms out above its rising 30 WMA and once this happens, investors must get into it. Do not try to pick bottoms in the current intermediate downtrend.
HDFC Bank
HDFC Bank has been moving in a descending channel as the stock has dropped below its 30 WMA. However, it is currently trying to make a higher intermediate bottom at the present moment and if this happens, the bull run in could be rekindled. The relative strength line for the stock has moved below its trigger line and is bearish suggesting that it has under performed the indices in the past few months. But as the short term relative strength is looking bullish, it suggest that the rate of decline in the stock has been lower as compared to the rate of decline by the Sensex in the current intermediate downtrend. Thus, investors will have to look at the daily charts and make a decision regarding the entry into the stock.
ICICI Bank
ICICI Bank had dropped below its earlier intermediate bottom in the intermediate downtrend and hence, the major trend of the stock is down. It has now been finding a resistance at its 30 WMA and could drop lower in the current intermediate downtrend. However, a higher intermediate bottom will suggest that the major trend of the stock is up. Investors can look out for long positions in it, if the stock exhibits higher intermediate bottom and the relative strength does not deteriorate. Like HDFC Bank, look at the daily charts for a better entry point.
IDBI Bank
IDBI Bank moved into a major uptrend in the earlier intermediate rise with a strong spurt in volume, which is a very bullish sign. The relative strength line is strongly up suggesting that the bulls are quite in control of the stock and the current intermediate downtrend will give investors a good chance to buy it towards its 30 WMA. Again, wait for the current intermediate downtrend to end and get into the stock at the right time. Higher levels in the stock are expected in the next intermediate rise.
United Western Bank
United Western Bank has exhibited a very sharp rise in the earlier intermediate uptrend as the stock is also declining at a very high speed. The major trend of the stock is up, but I do not like stocks, which decline at this high rate in the intermediate correction, even though they are in a major uptrend. Hence, investors must stay away from it.
UTI Bank
UTI Bank has been in a major uptrend for quite some time now as the stock has been exhibiting a very bullish relative strength. The stock has been consolidating sideways and any pull back of the stock towards the 40/42 levels, ie towards its 30 WMA must be used by investors to get into it. Higher levels in the stock will be seen once the sectors move up in the next intermediate rise. Once it crosses its earlier top of 51.95, there will be no resistance and the stock will see higher momentum.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.
