Take long positions in select counters

Deepak Singh Tanwar

The uncertainty over the US-led attacks on Afganistan is over. As a result, after an initial negative reaction, the market showed recovery from the day’s low and the net loss to the Sensex on Monday was of 47 points.

Ranbaxy, Reliance and HCL Tech showed impressive performances and gained smartly from their respective lows. However, Zee Tele, Hughes Soft, Satyam Computer and ITC dipped sharply.

As the US attacks have already started, this factor will no longer affect markets in a major way. Although the undertone of the market is negative, the process of recovery may start provided there is no fresh negative news.

For the Sensex, the level of 2830 points will be an important hurdle to cross. The position will weaken further below 2720 points. For Infosys, with the second quarter results to be announced on October 10, a narrow movement is expected till then. In any case, a minor base for counter is at Rs 2,300 and a major hurdle lies at around Rs 2,550.

The position of Satyam Computer is weak and a further decline is not ruled out. Zee Tele appears to be worst of the lot. As for Wipro and Digital Equipment, a sideways move to negative side is expected.
Other stocks also appear to be negative. Reliance also improved smartly from the day’s low. The stop-loss for long position should be Rs 242. As for RPL, the outlook appears to be negative.

ITC may also remain under pressure. SBI is likely to remain in a narrow range.

Ranbaxy was down marginally but the medium-term outlook continues to remain positive. So is the case with Dr Reddy’s Labs.
Cipla remained volatile and the weakness is likely to increase below Rs 1,020. The cement counters showed a dull trend. ACC and L&T are expected to remain under pressure in the near future. As for Grasim and GACL, a sideways move is expected.

Overall, long position in selective counters is advisable. The volume, however, should be low and long position should be in non-software stocks. The options market could also be a good choice.

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