On Friday 13, 1998 the BSE Sensex closed at 3373 points. As compared to the close of the previous week the index made a net gain of eight points. The index which for most part week remained subdued, woke up with a roar and staged a smart rally on the last trading day of the week. The sentiments which were at a very low levels suddenly were on steroids. The markets have this typical behaviour and the speed with which a market turn takes places is sometimes baffling and often awesome.India will be under the eyes of all the observers the world over as the largest democracy goes to polls next week. The initial exit polls suggest that the BJP will be a winner but may fall short of a clear majority. But the short fall in achieving a clear majority will only be slight and the party should not have a major problem in laying a claim to form a government. And to do this it may have to dangle carrots in front of some members of the opposition parties. If the forthcoming elections can give up a ruling force that cangive a stable government, then India will be the hottest market at least for next couple of years.
Last week we had expected that the index would hover in a range of 3310-3400 points for some more sessions before a minor up trend starts. The index made a low of 3261 points on Thursday before it began to rise. The first four sessions of the week were dull as the index started the week with a lot of skepticism and continued to lose ground. It was the Thursday's session that turned the tables. Thursday's session was a hammer and the low of this session was just above the underlying gap. The hammer was confirmed by an exceptionally strong candlestick on Friday. This pattern signals a minor uptrend to follow. The index could face some resistance at the level of around 3525 points. Notice in the chart that the entire downtrend in the index can be contained within a channel. The upper line of the channel is around this level. The upper line of the channel can be expected to offer resistance to the risingindex.
The MACD (Moving Averages Convergence Divergence) indicator is in a buy mode as it is moving up. The 12 day ROC (Rate of Change) has also started to move up. The index can be expected to make gather strength in the next week. The NSE is closed on Monday on account of elections in certain states. This means if on Monday, the BSE price rise is very strong, the scene on the NSE on Tuesday will be chaotic. The market is expected to be strong in the short term. Traders may remain long.
Bank of Baroda: Await breakout
This stock has successfully tested its December'97 low and has managed to rise above it. Currently the stock is just below its falling trendline and is on the verge of staging a breakout above it. The current week's price action suggests that there is a great deal of buying interest in this stock. The 12 week ROC is in the positive territory. Long term investors may consider buying this stock for a decent appreciation. Await for the price to surpass the level of Rs 110 beforebuying. Keep a stop loss level below Rs 100.
L&T: Go long
This stock has a special tendency to oscillate between Rs 190 on the downside to Rs 275 on the upside. Currently the stock has bottomed and a reversal of trend is signaled. The weekly MACD has also given a buy signal. The stock faces resistance at Rs 211. Once beyond it could rise to higher levels. One may buy at current levels. Keep a stop loss level below Rs 188.
Bata India: may rise
After announcement of good results this stock has staged a small decline. Currently the stock is poised at just above its rising trendline. The week also formed a bullish candlestick pattern. The stock could advance to around Rs 168 in a medium term. One may consider buying at current levels. Keep a stop loss below Rs 130.
ITC :Buy long
This stock has just broken above its resistance level of Rs 605. This means it can rise furthe to Rs 633. Traders may buy long at current levels. Keep a stop loss level below Rs 605.
Reliance Capital:Enter the stock
This stock has formed a bullish candlestick pattern the 'Morning Doji Star'. This is a bullish pattern and suggests reversal of trend. Traders may buy keep a stop loss below Rs 54.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
