February 19: A gain of 36 points by the Sensex today could end up misleading investors and traders alike and could lead to losses. In my reckoning, there is a strong possibility of the market slipping down, despite the apparent good show today. Bears, I feel, would become bold enough to strike out on Friday itself.The market opened strong with the Sensex at 3415, up 13 points over the previous close of 3,402. The index moved up by 32 points to post a high of 3,446.53. The marketmen still seem to be basking in the sunshine of Monday as the low for the day was only a shade lower than the opening at 3,411.75.
You could also easily get misled by the fact that the high for day was 10 points higher than the previous high of 3,436.95. The market closed with the Sensex at 3,437.64.
In my view, today's market performance is still not good enough to assure that the index will move up. On the other hand, many traders would get afraid of holding their long positions or even taking up new buy positions. There is adanger of scrips eroding their values slowly. Under the circumstances, it is not worth hanging on to the long positions.
On the other hand, it would make much more sense to book your profits and turn yourself into bears! You can do something even smarter. Sell only at peaks or when there is an attempt to take values higher than what you saw today. The following three scrips would fight any slip - IDBI, Mahindra & Mahindra and Tata Power. But whether they can hold if the selling gathers momentum at other counters over the next few sessions, is to be seen. I had talked of a resistance at the 3,384 level. But in the light of today's trading, the ability of this support to hold has weakened considerably. All that has been said above applies basically to short-term traders. The long-term and medium-term investors can still afford to watch the market's trend. They could sell their holdings if the Sensex moves below the 3,380-3,360 region.
Earlier, I had recommended an entry in Gujarat Ambuja Cement, alongwith the recommendation that you should target booking your profit at Rs.250. The scrip scaled a peak of Rs 254 and is now under reaction. You could now ride the scrip in the reverse direction. Short-selling at close to Rs 243 should be attempted, after the market tests the intra-day high at least once. Cover yourself at Rs 252.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
