Technical analysis: Long positions best avoided

Deepak Singh Tanwar

It was a day of some activity, however on the downside. Except Infosys, a large number of IT stocks dipped sharply and the index had to feel the pressure. Pivotals like Reliance, RPL, ITC also played their role and the net loss to the index was of 47 points on Thursday.

With the latest fall, the importance of the resistance level at 3525 points has increased further, and will continue to act as the first key hurdle. The next base as mentioned is at 3395 points, but whether it will bounce from there appears to be doubtful.

Infosys was the strongest counter, but the outlook however is not very promising. The downtrend may accelerate below Rs 3,735. The resistance continues to be at Rs 3,965.

Satyam Comp dipped sharply and is heading for its next base of around Rs 185. The level of Rs 216 is an important hurdle. As for Zee Tele, the level of Rs 129 will be difficult to cross. A minor base lies at Rs 115. Among the other heavyweights, HLL remained firm and but a major upmove is ruled out.

Reliance showed a sharp slump and the level of Rs 378 becomes an important hurdle now.

The trend on RPL is likely to be dull. The outlook for ITC continues to remain negative. SBI too may show a dull trend. The level of Rs 210 can be used as stop-loss for long positions.

Bhel dipped sharply, breaking its important base of Rs 175. A further fall is not ruled out. MTNL may show a sideways trend. The outlook for Tata Tea, Telco and Tisco is not promising either. Tata Power also showed signs of weakness. The position of Cipla however continues to remain positive and the uptrend may gather momentum above Rs 1,150.

The performance of cement counters was far from impressive. L&T dipped sharply and other stocks also witnessed selling. A further fall is not ruled out on these counters.

Overall, the outlook remains negative for both old as well new economy counters. Stay away.

(The analyst does not hold any position in the stocks mentioned in the article)