For a change, the sentiment remained positive throughout the day on Wednesday. The values opened strong in the morning, and old as well as new economy counters managed to sustain their gains to a large extent. With key stocks remaining firm, the Sensex managed to add 93 points.The main contributors were HLL, Reliance, ITC, Ranbaxy, Cipla, Infosys and SBI. It was a major relief for the index and it has come close to its first major hurdle of 3867 points. The latest move has increased the importance of the bottom of 3561 points. For the short-term, this level can be used as the first reference point for long positions by investors. After remaining weak for four days, HLL showed a smart bounce on Wednesday and provided a major boost to the index. The latest bounce for the stock will help its position only if it manages to remain above the level of Rs 209. If it breaks this level, the position will become bearish.
Reliance's position is much better. While the level of Rs 375 will act as the first major support, the position is likely to improve further above Rs 407. RPL, however, could not show a major bounce. The stock has a base at Rs 50 and position will weaken only below this level. ITC's move was impressive as it crossed the level of Rs 835 without much of an effort.
Still, it needs to form a higher bottom for a major change in position. One should wait for a higher bottom before taking any major position.
In case of SBI, the current bounce is more of corrective nature and for this reason, one should avoid the temptation of taking a long position. The uptrend of Ranbaxy should also be considered of a corrective nature. Except Grasim, the performance of other cement stocks was positive. Grasim is yet to break its important base of Rs 260.
MTNL will continue to face strong resistance at around Rs 152. Bhel, Tisco, and Telco may also show a mixed trend. The position of Hindalco is improving, and unless the level of Rs 720 is broken, long position should be kept open. The move on the Infosys counter should also be considered as of corrective nature, and will face a strong hurdle at around Rs 5,000. Satyam Comp will also witness a hurdle at around Rs 265. In case of Zee Tele, the position will improve only above Rs 150.
Overall, barring few counters like Hindalco and Reliance, the move is of a corrective nature, and one should be very selective in buying.
(The analyst does not hold any position in the stocks mentioned in the article)
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
