Developments in the political arena, after the closure of market on Tuesday has changed the complexion of the game. On Tuesday, the Sensex looked up despite it being the last day for the NSE settlement. On Tuesday, Jayalalitha was yet to meet opposition parties. And traders appear to have banked on the possibility that it will be the opposition, which would be forced to move a no-confidence motion. If that was the case, the opposition parties had to figure out a common agenda both for the motion and the government formation thereafter.But the President's directive has changed the entire complexion of the game. Not only that, prior to this, all the opposition parties had come together and visited the President. These post-Tuesday trading developments appear to have shaken up the market perception.
The Sensex opened with a downside gap at 3364, down by almost 100 points from the previous close of 3465. Nevertheless, the market made an improvement and the index posted a high of 3404. Looking at theintra-day movement of the index, it is clear that apart from the low opening, the market did not suffer from further selling pressure or panic. The day's low was 3343, and the index recovered to close the day at 3357, down by 108 points day over day.
Friday's market dynamics would be governed by a few important considerations. With the vote on confidence to be moved only on Saturday, punters will have to consider deeply about their strategies. How far does it make sense to carry over positions to Monday is the issue. Traders, I expect, would firm up their strategy by looking at the political developments during the day.
Should the downside pressure surface strongly, the index can dip to 3268, where it can take support. Sure, the market is going to pose a challenge, but I think select buying will emerge at close to 3268. I advise you to follow suit.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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