MUMBAI, June 1: The Sensex's close at 3,642.3 at the end of Monday should not cause too much concern technically. Let's not forget that the market had earlier gone down to the 3,589 level in the previous week. The silver line however is that the closing levels of several pivotals show that many scrips may have found their bottom already. And, therefore, the market has a fair chance of recovering on Tuesday.The post-budget session led to scrips shedding all the gains made in the pre-budget session. But the closing levels show that prices have not tested the previous lows, even though they have lost ground when compared with the morning session. But in the real sense, the market has not suffered any serious dent, if one were to look at it in the light of the decline before the budget. The market reaction appears to be at best a knee-jerk reaction.
Technically speaking, the market has tested the 3,590 level, and now it could recover and move towards the 3,750 level. But one should not be surprised if themarket goes down to test the 3,590 level before it moving up. On the contrary, an analysis of the various pivotals shows that the recovery is possible without a dent. ITC has come to rest at Rs 670, from which it had bounced back earlier. Telco could slip to Rs 225 before it recovers.
Mahindra & Mahindra has already hit the immediate previous bottom. With incentives given for credit via Nabard, the scrip may recover its poise. SAIL has a good chance of stabilising at Monday's close. Further erosion seems unlikely. But Tisco might take time to move up further, even though it did not lose much compared to the previous day. HLL may well lead the recovery, as would HPCL.
SBI, too, has hit its recent bottom, but its recovery might be delayed given the new conditions for banking. Reliance Industries, by having closed Rs 8 above its previous low of Rs 158, has exhibited its upside potential. Bajaj Auto might use Rs 591 as a speing board if the downtrend persists. ACC is intact at Rs 1,685, as is Gujarat AmbujaCements.
The market appears to have over-reacted. The reaction seems more out of disappointment over several measures that the market had expected from the budget. But since the budget would facilitate growth, it is likely that a reassessment would help recovery. This feeling is also reinforced by the limited fall in several scrips. A detailed look, technically, leads one to believe that the market has a fair chance of recovering on Tuesday.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
