The Sensex has now fallen through the uptrend support line at 3,742 level, as well as the seven-day exponential moving average, which is at 3,728. While being open to the possibility of the market accentuating further south, traders would benefit by basing their strategy by taking note of the rectangular pattern formed by the Sensex. The market opened weak with the Sensex at 3,713.02 and closed at 3,716.50. The Sensex has not been able to digest the 200-point rise since February 24 to March 2. But while not violating the uptrend, the Sensex settled itself into a rectangular pattern essaying a zigzag motion within the rectangle, between 3,655 and 3,810. One should wait and see if the rectangle formation fails to hold, for which the Sensex should fall through the 3655-3644 region.
Now, even though technical indicators have signalled a sell on the Sensex for both short-term and long-term traders, we shall try to squeeze an operating strategy within the rectangle.
ACC is still not in the oversold region. Arvind could move down to Rs 57.50. Bajaj Auto could move down to Rs 550. But it is much closer to the oversold region now. So the fall could be slow and measured, and you would need to cover your track often in shortselling. Also, selling at higher range alone could be a safe policy. BHEL is resisting the fall. Do not short sell, nor be in a hurry to buy. Entries could be at Rs 298. BSES is vulnerable to shortselling; but allow it to test Rs 200 once. Hold Colgate and wait to buy more. Target entry in Glaxo at Rs 325. Though technicals indicate a sell, Gujarat Ambuja can surprise you by moving up. Be guarded on this counter. Sell HLL closer to Rs 1600 and place stop loss at Rs 1615.
HPCL is close to oversold level and could resist at Rs 424. On ICICI, conservatives should book profit. Longer term investors should hold on. Hold on to Hindalco as well. On IPCL book profit closer to Rs 68. Hold on to IDBI and Indian Hotels. Hold on to ITC and add more closer to Rs 720. Continue to sell Larsen & Toubro, but hold on to Mahindra & Mahindra. MTNL could turn back anytime between now and Rs 246. It would be difficult to predict. At Ranbaxy book part profit at higher levels. Reliance is vulnearble to Rs 167 - Rs 165 levels. Shortselling could emerge. Shortsell SBI at higher levels and cover at Rs 269-Rs.270 area. Tata Chem could find resistance at Rs 132.50. Hold on to SAIL. Trading in Telco could prove frustrating. Tisco could find support at Rs 132.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
