The post-budget rally has successfully managed to change the medium term market outlook. In a 416-point rally, the major contributors were ITC, HLL and off course State Bank OF India. In fact, the rally in SBI came as a major relief for the market mainly because on last Friday, it closed at an all-time low. And that was extremely bearish. The turnaround has been good for the stock as well as the market. Infosys, NIIT, L&T and Castrol were other counters which provided a boost to the Sensex.For the Sensex, the long-term resistance is only above 3900 points. The Sensex should face resistance in the range of 3950-4000 points. However, expecting a one-way run upto this level would be too much. Some of the counters seem to have lost steam and a major rally from the current levels is unlikely on these counters.
Take for instance, HLL. The stock showed a dream run but a similar run from the current level is unexpected. On the contrary, the stock may show some reaction. Similar can be said about the number twostock, ITC. Although the stock is in a new bull orbit, profit booking is expected at higher levels.
As for SBI, it should face a strong resistance around Rs 201. Reliance, however, is yet to show a dream run. The stock has remained firm but the performance has been pale compared to HLL, ITC and SBI. In the coming days, however, Reliance may perform better than these three counters. Bhel, MTNL, Hindalco, and HPCL are weak.
Overall, the Sensex is expected to witness profit-taking. This process is likely to start late on Monday or latest by early Tuesday. An intra-day high on Monday is most likely. Overall, partial profit-booking is a must.
Among the software counters, with Friday rally, stocks like Satyam Computers, Rolta and Silverline have entered into a new bull orbit. A further rally from the current level on these counters is expected. As for Pentafour Software, bull run is expected only once it crosses Rs 1020 level. NIIT and HCL Infosystems may remain dull. However, Infosys may show a sharprecovery.
Among the Tata counters, Tisco and Telco have remained weak and are expected to behave in a similar manner in the coming days. Tata Tea is expected to show a rally but may not be in a position to sustain it. The only Tata counter which appears promising is ACC. The stock can expected to extend its gains.
Among the other counters, positive trend is likely on counters like ABB, BPL, Castrol, Cochin Refineries, Grasim, Hero Honda, Ingersol Rand, M&M, Siemens and Philips. However, counters like Arvind Mills, Ashok Leyland, Asian Paints, Balarampur Chini, Ballarpur Industries, Essar Steel, Excel Industries, GNFC, Hindustan Motor and Lakme may show a negative trend.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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