Avoid short-selling, outlook is positive

Deepak Singh Tanwar

The index showed a fall of 35 points on Tuesday as traders, as well investors booked profits at higher levels. The opening was firm, but prices dipped during the second half of the day. Counters like Infosys, Satyam Comp, Digital Global, HFCL, SSI, ITC, Reliance showed a significant fall. Although, the fall has been sharp, the level of 3220 points remains an important support. The immediate resistance lies at around 3400 points.

While the undertone will remain positive, the index is likely to move in the range of 3220-3400 points. Infosys which had hit an upper circuit of 10 per cent on Monday, witnessed selling pressure in its resistance area of Rs 4,100. Although, the counter lost 4 per cent, the short-term outlook for the stock continues to remain positive. Wipro gained 5 per cent and the outlook is positive. The next major hurdle for the counter lies at around Rs 1,800.

Counters like NIIT, Satyam Comp, NIIT, HCL Tech, Hughes Soft, SSI, HFCL, and Global Tele may also consolidate around current levels.
Zee Tele is approaching its immediate resistance of Rs 150. The undertone for the stock is positive and if it crosses its first resistance, it will not bring any surprise.

Among the old economy stocks, domestic pharma counters showed strong buying interest. Ranbaxy gained 2 per cent and it seems ready for further improvement. The next major hurdle for the stock is only at around Rs 800. Cipla has also shown a firm trend and further improvement is not ruled out. Dr Reddy’s Labs witnessed buying, but showed a sharp reaction during the second half of the day. A consolidation is likely around current levels before a big move occurs on the positive side.

Cement stocks like ACC also remained in demand. ACC has made a good base at Rs 153 which can be used as stop loss for short-term long positions. Grasim also diplayed strength and further improvement will not bring any surprise. L&T, India Cements and GACL may also show a positive trend.

SBI was another stock which gained smartly. The stock is all set to enter into its resistance area of Rs 225. ITC dipped sharply, but the medium-term position remains positive. HLL, MTNL, Bhel, RPL may also display a firm trend.

The outlook for Reliance continues to remain positive and a long position can be taken with stop loss of Rs 283. Telco showed a dull trend and consolidation is expected around current levels.
Overall, while profit booking may continue in some counters, the outlook remains favourable for the market.

The analyst holds long position in Ranbaxy, Dr Reddy’s Labs and L&T