Undertone to remain bullish

Deepak Singh Tanwar

The undertone was mixed on Monday and second rung software stocks managed to attract strong buying. The index lost 16 points and the decline was contributed by Infosys, Dr Reddy’s Labs, Ranbaxy and RPL.

Wipro, Digital Global, Zee Tele, L&T and GACL, meanwhile, gained smartly. The index continues to remain in a narrow range before a big move occurs. The position will improved smartly above 3320 points. While the index may display a mixed trend, select stocks will be able to get good buying support.

Infosys, which dipped more than 2 per cent on Monday, is yet to show any major weakness. A positive move is not ruled out. The level of Rs 3,450 is an important base. As for Digital Global, the stop loss for long position should be Rs 370. On the upper side, major hurdle is likely only at around Rs 480. Wipro also remained strong for a major part of the day and the chances of its moving above its immediate hurdle of Rs 1570 are bright.

The resistance thereafter will be at around Rs 1,800. For Zee Tele, the level of Rs 122 has become an important base and should be used as reference point for long positions. Satyam Comp will start weakening only below Rs 200.

A positive move is also expected on counters like Global Tele, NIIT, SSI and HFCL.

Cement stocks also remained in demand on Monday. The outlook for the cement sector continues to remain positive and further improvement is expected. The stop loss for L&T is Rs 196, whereas resistance for the counter is expected at around Rs 230. As for Grasim, hurdle is likely in the range of Rs 330-340. GACL, India Cements and ACC may also do well. Among the domestic pharma counters, Cipla did well and gained smartly. Further, improvement is likely and the next hurdle is expected only around Rs 1,200. For Dr Reddy’s Labs, the stop loss should be Rs 890 for long position. The outlook for Ranbaxy continues to remain positive.

The heavyweights are also expected to perform well. ITC will weaken only below Rs 640. As for Reliance, the immediate base lies at around Rs 284. The uptrend may gather momentum above Rs 304. RPL may move sideways. SBI may also display a mixed trend. Medium-term position of counters like MTNL, Bhel, HLL, HPCL continues to remain positive. Among the automobile stocks, Telco remained firm and the next resistance is expected only at around Rs 115. M&M may also show strength. Overall, selective buying should be on, but short position needs to be avoided.

The analyst has a long position in Ranbaxy, Cipla, L&T and Telco