MAY 3: It was a violent day at the bourses. The markets opened deep down at4201, a straight drop of 171 points from the previous close. But within thefirst half hour prices surged as smart traders rushed in to pick at theexaggerated bottom level. While the mid-day saw steady improvement, therewas a bout of profit-booking. The market threatened to go down once again.But with one hour left for close recovery set in.The relaxation of limit for daily drop to 12 per cent appears to havecontributed to the violence. But the interesting part of the story is thatsmart operators took advantage of it.
In fact, I am left wondering, if the serious drop at opening was engineeredto scare everyone into selling. Sebi perhaps has the means to investigatethis. Let me get back to technicals and try to see the pattern and riseabove the din and dust to see what does the day's trading indicate in thetechnical picture beyond the day's trade.
The dip to 4110 is definitely not a healthy sign. The index has dipped belowthe 4209 low posted on November 2, 1999. The market closed with the index at4335, lower than the previous close of 4372. Therefore even though the day'shigh was 4395, the performance for the day as a whole has bearishconnotations. Yesterday I had argued that the fundamental background doesnot reason out a great fall. But today's technical dip overrides that logic.
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