MUMBAI, November 2: On October 30, 1997, the BSE sensex closed at 3803.24 points. In just two trading sessions the market had lost 155 points. The mood was sombre on the eve of the mahurat trading as the new year began on a bearish note. The usual pomp and splendour associated with the mahurat day was absent and the stark display of wealth was also low-key.

Last week, markets across the globe experienced some very volatile trading activity. Markets from the US to the Far East experienced a turbulence of activity as the stocks moved up and down in an uncontrolled frenzy. The most notorious of the markets was Hong Kong which recorded double digit gains and losses in a matter of days. The manner in which the individual markets have moved, it must be believed that under such market conditions billions are lost or gained in a matter of minutes. For a trader, this type of market activity is a make or break kind of a situation. Within a matter of seconds a trader could the money of a lifetime or end up losing his shirt.

The Indian market also experienced unprecedented volatility as the NSE lost heavily in Tuesday's trading, but recovered most of it the next day. The Indian markets are no longer insulted as it was in the yesteryears. Now major international events have its affect on the Indian markets. One noteworthy point is that the so-called mature and stable markets can also turn volatile and, hence, uncontrolled speculative fervour is not limited to the Indian markets. As the Indian markets merge with the other markets such swings will become more frequent.

There were only two trading sessions last week. Thursday's session opened with a downside gap of 130 points and virtually remained unmoved. As the opening and the closing values of the day were nearly the same the index has formed a doji. What is worrying of this trading session is that the index opened with a downside gap -- this is a very bearish development. The index is now approaching its September 22 low of 3758 points. A break below this level should see the index seeking the next support level of 3650 points where it is expected to stabilise. It is difficult to state when the market will stabilise. It is quite possible that the markets may open weak, commence a stiff decline and rally with a renewed gusto. Under the circumstances the best possible thing to do is keep small trade sizes and look for larger swings. Hopefully, this week sanity should prevail and the markets should return to a state of normalcy.

L&T: Good potential

The stock is currently poised at its support level of Rs 188, a strong support level. Viewed over a multi-year period, this level has acted as a reversal point on several occasions. Seen over a much shorter period, the stock has been hovering in a range of Rs 188-285. One may consider buying at current levels expecting a decent rise. Keep a stop loss level below Rs 175.

ICICI: In a range

Since the past three months, the stock has been holding steady in the range of Rs 88-108. The stock is in a long term uptrend and those who have missed buying the stock at around Rs 88 have a chance to do so now. The last downfall in the stock was with very low volumes suggests that the uptrend has only shown some correction and there is potential for the stock to reach higher levels once the market stabilises. One may buy at current levels. Keep a stop loss below Rs 72.

Pfizer: Invest on declines

The breakout beyond a level of Rs 300 in this stock met with some selling pressure at higher levels. The stock becomes an attractive buy once it declines to around Rs 325. One may consider buying at this stock at declines. Keep a stop loss below Rs 300.

ITC: Sell short

ITC has broken below its support level of Rs 570 and now a possible decline to Rs 340 may take place. Short term traders may consider selling at current level. Keep a stop loss above Rs 570.

BSES: Buy long

The stock has formed a star at its support level of Rs 178. This could be a part of a bullish candlestick morning star pattern. Short-term traders could consider buying this stock at current levels. Keep a stop loss level below Rs 178.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.