Deepak Singh Tanwar

The software stocks witnessed extremely wild moves on Wednesday. After showing strength during the first half, a sharp dip took place during the second half. However, in the last half an hour, prices recovered sharply, and a large number of counters managed to close at the day’s high. In the process, the index gained 32 points.

For index, counters like ITC, Ranbaxy, SBI, HLL, and Satyam Computer contributed the most. From index point of view, the level of 3230 points should be considered as the first base.A resistance is expected at around 3400 points. Infosys remained extremely volatile. The level of Rs 3980 is the first base, and the outlook will start improving above Rs 4160.

The last half-an-hour rally was triggered by Satyam Computer which gained 5 per cent. The level of Rs 224 becomes an important support, and long position should be liquidated only below this level. The first major resistance is at around Rs 250. For Digital Global, the immediate base is at Rs 480. Wipro also remained firm, and the outlook will strengthen further above Rs 1680.

HCL Tech remained in demand but failed to show impressive gains. The level of Rs 270 remains the first reference point for long position. It has a resistance at around Rs 320. Counters like Zee Tele, HFCL, SSI, and Global Tele may also show a positive trend. The performance of the second rank counters was also impressive.

Aftek Info gained smartly. The stock is above its medium term resistance, and further improvement is not ruled out. The level of Rs 260 is an important support. Polaris, Mastek, Rolta, and Visualsoft may also advance. For Polaris, the level of Rs 285 should be used as stop loss whereas the level of Rs 215 can be used as reference point for Mastek. VisualSoft should be liquidated only below Rs 158. Overall, the position of software stocks are likely to improve steadily. The old economy counters also improved. ITC, SBI, Bhel, Dr Reddy’s Labs, Telco, and Ranbaxy may show further improvement. The performance of the cement stocks was also positive. ACC was the strongest, and further improvement is not ruled out. L&T, Grasim, and GACL may also advance. Overall, with sentiment showing a steady improvement, selective buying can be done.

(The analyst has a long position in Digital Global, Mastek, Telco, and Reliance)