Downtrend likely to continue

Deepak Singh Tanwar

After a long period, the market showed some movement. Unfortunately, it was on the negative side and the Sensex lost 42 points. Infosys, Reliance, Dr Reddy’s and Zee Tele were the main contributors to the fall. HLL and RPL, however, were up marginally, else the fall could have been sharp.

As for the Sensex, a minor base lies at 3240 points below which the position will simply turn bearish. The next support lies at around 3097 points. Immediate hurdle is at around 3300 points. The outlook appears negative and long positions should be avoided.

The performances of IT stocks were negative as well with Infosys leading the pack.

For the first time in the last eight weeks, it has dipped below its important support of Rs 3,575. The next base for stock exists at around Rs 3,170.

Satyam Comp and Zee Tele also showed a negative trend and the decline is likely to continue in both these cases. Wipro and Digital Equipment also came under pressure and will find it difficult to reverse the trend.

Among the old economy, Reliance dipped and the fall is likely to continue. It has a minor base at around Rs 300. HLL managed to remain firm and the trend is likely continue.

The position of SBI and ITC is not very encouraging.

Tisco, Tata Tea and MTNL may also remain under pressure. Among the domestic pharma stocks, Dr Reddy’s showed a fall but the medium term position is yet to remain positive. Unless the level of Rs 1,670 is broken, medium-term players need not worry. As for Cipla, the outlook continues to remain positive.

Ranbaxy has also remained firm and the level of Rs 590 should be used as stop loss for long positions.

The position of the cement counters is weakening by the day and a further decline is not ruled.

Overall, the undertone remains negative and values are expected to remain under pressure. Avoid long position.

(The analyst holds a long position in Dr Reddy’s Labs)