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K Seshadri
The first signs of reaction in the current bull run emerged on Thursday. What lies ahead for the Sensex. Here is an attempt based on techno-fundamental analysis.
HLL and ITC have a weight of around 33 per cent in the Sensex. HLL flared up from a level of RS 1875 pre-budget. The company stands to gain in terms of the rationalisation of excise duty, impetus to detergent sales, and tax shelter to small scale industries from which it sources its products. Sure, HLL may be in a position to further increase its volumes and improve its margins. But the stock price is running ahead of these incentives fructifying into net profit numbers. In terms of technical analysis, the scrip faces resistance at Rs 2156. Reaction can bring it back to Rs 1950 or even Rs 1870 levels. In the case of ITC, there has been effectively no further hike in excise duties. But clearly growth has started stagnating.
While there has been a sense of relief in that there has been no further additional excise impost, the swift rise in thestock price has little to support it in terms of fundamental performance or potential. Technically ITC faces a resistance at Rs 940 level, which it broke through on intra day. Yet one will have to respect this level, once again. Keep your fingers crossed. The scrip could come down to Rs 860 levels. Reliance has a weight of over six per cent in Sensex. It is slowly advancing and cannot add a big push. Infosys has a 4.6 per cent weight and has already started reacting in a big way. The reaction can bring it down to Rs 2968 or even Rs 2832 levels. And now take a look at the Sensex picture. You will realise that the top side of the channel can indeed prove to be a resistance. On reaction the index can come down to 3400 to 3500 levels.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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