On Friday, the traders will have to carefully weigh their options. Short-sellers might opt to square up, as it is difficult to predict the likely turn of events on the Kargil front. The Pakistan prime minister is meeting his army chiefs on Thursday and some action is bound to follow from here. The US has again disagreed and disaproved of Pakistan dragging the Siachen affair into the present conflict. Traders should not rule out the possibility of US applying more pressure especially on the eve of the IMF allocations pending. Some sections of US Senators are now urging President Bill Clinton not to fall into the Pakistani trap of internationalising the Kargil issue.

Put all these together, it might make sense for short sellers to square off and be wary of creating fresh short sell position.The volume picture too supports such a logic. Volumes were down on Thursday. The volume in advance came down from Rs 1078 crore to Rs 816 crore and that on decline has come down from Rs 856 crore to Rs 699 crore.

The market opened with the index at 4,333, some 11 points higher than the previous close of 4,322. However, the day's high at 4,356 was lower than the previous high of 4,373. The index however did not dip lower than on Wednesday. The intra-day low was at 4,310, higher than the previous low of 4,307. The index closed at 4,326 posting a gain of 4 points over the previous close of 4,322.

Market operators concentrated on hot stocks and ignored others. Aluminium, Cement and tyre stocks were the target of traders, who decided to have a good play despite the depressive mood arising from the border conflict. It was a day for cement stocks, which kept moving up irreverent of the developments in Kargil. ACC, Gujarat Ambuja, Larsen and Toubro, Grasim and Indian Rayon all posted gains. Comparatively, pharmastocks were ignored. Since these scrips are languishing at the bottom, there was not much erosion. It would take a while for the market to turn its attention on this sector. Aluminium stocks continued to move up. ITC has fallen through a support level and is therefore its fall has accelerated. On the other hand HLL could find some strength on Friday.

The daily stochastics of Sensex has signalled a sell, but not so the long term RSI indicator.