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Mixed trend may prevail

Deepak Singh Tanwar

The undertone remained positive on Monday and the index managed to gain 7 points. The performance of select software stocks like HFCL, Global Tele, SSI, NIIT, Hughes Soft and Mastek was impressive.

Old economy counters, meanwhile remained dull. As the undertone is bullish, the outlook for the index remains favourable. The level of 3400 points is unlikely to be broken in the short run. A minor hurdle is expected at around 3500 points. While the second rank software counters remained in demand, Infosys could not get any buying support. While a minor support for the counter lies at around Rs 4,300, a positive move is not ruled out.

Digital Global also witnessed selling pressure for a major part of the day. The level of Rs 440 should be used as stop loss for long position. Zee Tele may decline, but a sharp fall from the current level is not expected. It has a good base at Rs 126. Wipro, too, could not get major buying support. Yet, the position continues to remain favourable and a bounce is expected. The performance of HFCL, however, was impressive. It gained 13 per cent and the uptrend may continue. The level of Rs 108 is an important support for the stock.

For Global Tele, the stop loss should be Rs 144. NIIT also hit an upper circuit at 10 per cent. The stock is above its immediate resistance and the next problem area is only at around Rs 320. In the case of SSI, strong resistance exists at only above Rs 300. Overall, the performance of software stocks is likely to be positive and select long position can be taken.

Reliance did not show impressive gains, but a positive move is expected. RPL, too, remains above its major base of Rs 32 which should be used as stop loss for long position. ITC improved and consolidation is expected around the current levels. The position of counters like SBI, MTNL, Bhel, BPCL, HPCL, Tata Tea and Tisco remains favourable.

The cement sector also remained dull for a major part of the day. The outlook for counters like L&T, Grasim, ACC and GACL remains positive. Domestic pharma counters also remained lacklustre, but the medium-term position of Cipla, Ranbaxy and Dr Reddy’s Labs remains favourable. Long position can be taken.

The performance of the automobile sector was also dull. Telco is expected to show consolidation before any major move on the upper side. The position of stocks like M&M and Bajaj Auto continues to remain favourable. Overall, select counters are expected to do well.

(The analyst holds long position in Ranbaxy, L&T, and Dr Reddy’s Labs)