Support likely to emerge at 3,344
K Seshadri
The selling pressure has continued on Thursday too. This was to be expected, as the trend of the market was reversed on Wednesday with the bears stepping out of the shadows. Once the first step had been taken, there was no scope for the scrips to resist the slip.To recall the readings in this column over the past few days, most of the scrips had been going through a process of consolidation. This consolidation formed the basis for a take off of the Sensex. That is exactly what happened on Monday. Monday's rise of 98 points was beyond normal expectation. Therefore the reaction on Tuesday was to be expected. But what began as a correction for the over-enthusiasm of Monday has now transformed into a weakness. While on Monday some FIIs were reported to have made purchases, the news of net FII selling reported for the trading so far in January has turned the initial enthusiasm to one of disappointment. Operators seem therefore to be squaring off their positions. Lack of support has emboldened bears. The
current trend in the market has exposed the thin ice on which Indian stocks are trading. The market has made repeated attempts to move up. This upward mobility cannot come through if the scrips were not perceived to be underpriced. Yet whenever the support fails to materialise, even for extraneous reasons, the Sensex starts falling back. In the chart presented it can be seen how the Sensex fell through a support at 3428. If one now draws the bottom support arising out of the bouncing back from the 3251 level posted on December 12, the Sensex could take support at 3344. Friday happens to be the closing for the BSE. That might put breaks on bears enthusiasm to continue to press sales. If that happens the Sensex has a chance to recover marginally. On the other hand, they could also switch the position to NSE, and continue the bear maul, however mild that may be. Technically the Sensex is neither overbought nor oversold. Therefore, the ultimate direction of the market will be decided by whosoever decides to
strike out. Money has become dearer for borrowing last week and badla might cost more. That could end in a stalemate between bears and bulls!
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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