Deepak Singh Tanwar

IT was one of the bloodiest day for the IT stocks. In fact, for the first time, Infosys remained at the lower circuit of 16 per cent for a major of the day.

Zee Tele too remained at the 16 per cent down circuit. The performance of Satyam Comp, Wipro, and other IT stocks was also depressing.

The old economy stocks also witnessed selling pressure, and the net loss to the Sensex was of 122 points. The future continues to be negative.

The index is approaching its next base of around 3200 points and any rally would be of corrective nature.
Infosys, which lost 16 per cent, is expected to shed more points in the near future.

The position of Zee Tele is no different, and a further fall is likely. Satyam Comp is also expected to remain negative.

As for other heavyweights, Reliance showed a bounce from the day’s low, and a sideways move is expected in the short run.

The position of RPL is also weak, and the performance is expected to be negative. HLL is yet to witness a major drop. And the process may begin below Rs 212.

The level of Rs 218 now becomes the first major resistance. ITC has also displayed signs of weakness, and the level of Rs 856 will act as major hurdle on the upper side.

SBI continued its corrective move but things may be not be easy at higher levels. The position of Ranbaxy weakened further, and the trend is expected to continue.

The outlook for Tisco, Telco and Bhel also appears negative. Cipla also showed signs of weakness. Unless the level of Rs 1,050 is crossed, one should avoid long positions on this counter.

Dr Reddy’s also appear on a weak wicket. The cement counters also witnessed selling pressure at higher levels and the top formed on Tuesday will continue to act as a resistance level in case of all cement counters.
Overall, while the downtrend on IT counters is likely to continue, the performance of old economy may also be affected. Be cautious of long positions.

(The analyst does not hold any position in the stocks mentioned in the article)