MUMBAI, June 23: The Sensex opened the week on the Bombay Stock Exchange at 4091, a level higher than the closing of the previous week, which was at 4083.

Nevertheless, the opening was lower than the opening level of last Friday (4101.67). The index posted an intra-day high of 4120.63, which again was lower than the high of Friday (4142.75) by 22 points.

However, the bottom of Sensex went up. The low of the day was at 4076, higher than previous trading day's bottom (4060). The day's trading closed with Sensex at 4090.77, almost at the same level as the day's opening, which was at 4091.33.

An analysis of the Sensex in the last few days makes an interesting reading. First a look at the Sensex closing. On June 19, the Sensex closed the day at 4088.98. In the next trading session, the Sensex closed five points lower at 4083.04.

On Monday, the first day of the new settlement, the closing was at 4090.77. This shows that the Sensex is flattening out and has slowed down in its ability to post a firm trend of higher bottoms. If one looks at the high, low and the daily range, it is clear that Sensex is not making higher tops. On the other hand, the bottom support is getting firm at around 4060.

Actually, one of the technical short term indicators had triggered a sell last week at 4087. Now this is an early signal. If one went by this signal he would have ended up selling before the Sensex actually peaks. But on the other hand, if you are looking for a sure signal, it would come through only when the market has recorded a significant drop from its peak, whatever that peak may be.

Now let us probe further. As the market stands today, the indications are that an upper limit of 4114 and a lower limit of 4089 would become threshold points. If the market becomes weak today, it would be interesting to see if it bounces off at 4089. Similarly on the upside, it could meet with a resistance at 4114. A break down of 4089 could push the Sensex further down.

On the other hand, a break through the 4114 resistance would indicate that the market has gathered strength. Now what posture does one take in this market? It is clear that the Sensex is flattening, as shown by its daily closing. Reliance might keep it buoyed, as would BHEL and a few others.

Actually, it would take another 2-3 sessions to see if Sensex can launch itself into a higher orbit. Meanwhile, it appears wise to exit from long positions, in scrips which have exhausted most of their potential to move up further.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.