Finally, there is some buying. Friday's trading screen was a sight for sore eyes. Not just because the Sensex moved 300-odd points but because there was a visible return of sanity to the broader market. Prices of many mid- and small-cap stocks seemed to have fallen beyond any rational level. A selling fatigue had to come at some point. Sometimes oversold markets need only a small bit of buying to jerk stock prices back up. That initial impetus came from the foreign funds last week and it was good to see that domestic investors and traders were back in the futures market by the end of the week. The Rs 4,000 crore of fresh open interest that got added was the first feeble sign of momentum after a month of disbelief and despair.
While the repair work has just begun, there is one heartening sign flashing out there. The market is shrugging off bad news. In this, the US has led the way. The way it has consistently ignored all bad economic data over the last fortnight has lent heart to emerging markets that the worst perhaps is in the price. The Sensex dived immediately after the bad inflation data came out on Friday but recovered to close at the highs of the day. That is promising. When a market starts discounting bad news and moves against it, it shows it wants to move up. Indeed, last week was a fairly constructive week for the market, after a long time. It is too early to say that the blues of the last quarter of 2007-08 ended with the entry into the new fiscal, but at least it is a start.
While beaten down sectors like realty and metals have staged a comeback, the large-cap leadership is clearly with information technology. That is interesting as in a fortnight's time we are heading into the most pivotal annual event for this sector, the 2008 guidance from Infosys. Stocks are rallying ahead of the event. The Nifty, too, is poised at an important juncture. The next 150 points are quite critical. Getting above 5,000 and then negotiating the hurdles between 5,000 and 5,100 will be good tests of the strength of this nascent upmove. If the domestic interest sustains and global markets are even mildly supportive, we could get above that hump. That would revive sentiment to a great extent. The screen looks better but let us take it one step at a time.