Speed of fall has slowed down. As against the previous week's fall of 186 points, the sensex lost 69 points last week. The fall was mainly on account of a sharp fall on counters like State Bank, L&T, Bhel, Telco and Tisco. In fact, Tisco and Telco have touched a four-year low. ITC also dipped but the fall was considerably lower. It was down by two per cent on weekly basis. The fall could have been sharp had Hindustan Lever showed similar dip. It was up by Rs 6 on weekly basis.The sentiment is continue to be bearish but the outlook is certainly better than what it had appeared on previous Friday. The reason for this is simple. On previous Friday, the position of stocks like SBI, Bhel, Bajaj Auto, Larsen & Toubro and other smaller index based stocks like Telco and Tisco was extremely weak. At that juncture, all of these stocks had hinted at a further fall. Since the expected fall has taken place on most of these counters, the position of these respective counters is certainly better than what it was.
Atcurrent levels, the short-term outlook of Hindustan Lever appears positive. The second major in the sensex, ITC is however showing a mixed trend but the chances of an uptrend are greater than a fall. Reliance should also take a support at its 8-year old trendline. SBI also has a long-term support level at Rs 152.50. If all these stocks show some improvement, smaller stocks do not have any option but to follow the heavy weights.
As such, most would depend whether the long-term support levels in the case Reliance, SBI provide the much needed support. The sensex is also in similar position and enjoys a strong support in the range of 2700-2750. Overall, it would not be very long before the market witnesses a sharp technical rally.
As far as the second rank stocks are concerned, stocks like ACC, Arvind Mills, Bharat Forge, Ceat, Colgate-Palmolive, GE Shipping, Global Trust, Grasim, Godrej Foods, ICICI, ICICI Banking, LIC Housing Finance, Madras Refineries, L&T, Mahindra & Mahindra, Oriental Bank of Commerce,Relinace Capital, Sterlite and Tata Chemicals will continue to remain weak. Profit should be booked on the counters like Britannia, Burroughs Wellcome, Cadbury, Carrier Aircon, ICI India, Philips, and Punjab Tractors. But this does not mean that all the stocks are bearish. Among the specified list, Hindalco, Ranbaxy and Voltas are expected to remain bullish in the near future. In fact, Voltas has given a fresh buy signal and hinting at a new high.
For investors however as we said last week, some counter offer attractive valuations and can give decent return in the short-run. Start picking up stocks in small quantities for a medium term prospective.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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