Mixed trend is likely

Deepak Singh Tanwar

The day started on a strong note, but as a result of profit booking, market showed a substantial correction from the peak. The index reacted more than 100 points from the high, and the fall was contributed by stocks like Dr Reliance, HLL, RPL, Reddy’s Labs, and Ranbaxy.

While profit-booking was the key feature on Tuesday, a sharp fall from the current level is ruled out. A support is likely at lower levels. It may make a base at around 3200 points.

The resistance is likely at around 3350 points. While a large number of IT stocks remained under pressure, Infosys remained firm. The level of Rs 3,450 can be used as stop loss for long positions. On the upper side, as mentioned earlier, a strong hurdle is likely only at around Rs 4,000. Satyam Comp also displayed strength and the level of Rs 192 can be used as stop loss. Zee Tele, Hughes Soft and Digital Equipment may also show a firm trend. Global Tele, NII, SSI and HFCL expected to move sideways.

Meanwhile, old economy counters also came under selling pressure. Reliance reacted sharply.

Yet, the medium position for the counter is positive and a sideways move is likely. So is the case with RPL.

Among the cement sector, L&T dipped sharply, breaking its
immediate base of Rs 200.

The new base is likely to be made at around Rs 190. On the upper side, the position will improve smartly above Rs 213. Grasim, ACC and GACL is expected to show a firm trend. The outlook for stocks like Telco, Bhel, MTNL, Telco and Tisco continues to remain positive. ITC showed a dip and the chances of a sideways move are higher. HLL is expected to show a firm trend.

Among the pharma stocks, Dr Reddy’s Lab lost 4 per cent, but the selling pressure was absorbed well.

The new referance point for long position is Rs 850 and all the long position should be liquidated below this level.

Ranbaxy and Cipla are expected to show a sideway move.

Among the automobile sector, Telco manage to show a firm trend. The outlook for Telco, M&M and Bajaj Auto continues to remain positive.

Overall, while the process of profit taking is likely to be on, buying support is expected at lower levels.

The analyst holds long position in Telco and Dr Reddy’s Labs