In my last column on Thursday, I had pointed out that the Sensex was set to make a major thrust upwards either on Friday or during this week. Last Friday, the index went up from 2931 to 2975, and on Monday the index has made a further leap northwards by 77 points to 3052. The Sensex opened the week with a gap at 3017, which was higher than the last week's high of 2986. An opening up with a gap is a strong bullish sign. The index touched an intra-day high of 3064 and closed 12 points lower at 3052. On the weekly charts, the RSI indicator has signalled a buy. It is at 39.53 with the trigger line at 37.35. This is one more confirmatory signal for medium and long term investors to get into the market. Monday's market rise has been influenced by sharp recovery in other markets in south east Asia. Kuala Lampur has recorded spectacular gains. Politically connected stocks rose. The market is rising because the interest rates are likely to come down and also stocks were trading below their asset value.In Korea,there are many restrictions still on to counter speculative attacks. The Hang Seng surged 8 per cent, with introduction of monetary measures. Hong Kong's economy is still grim. And the currency dilemma is yet to be resolved. In short though these markets have shot up more due to speculation than change in fundamental perception.
The Sensex is now looking at the target of 3252. But considering the robust rise on Monday, certain amount of profit booking is most likely on Tuesday. ACC has only made a modest gain and could therefore move up further. Colgate has now entered positive territory. HLL continues to be weak, as is Nestle. Glaxo joins its ranks. IPCL has made a bold stride further, but is bound to invite profit booking. The surge in SBI is most impressive. It not only opened with a gap but posted a hefty gain to close at Rs 202. Volume has shot up from Rs 57 crore to Rs 139 crore. ICICI has broken upwards and long term investors should consider buying. ITC is week and could shed its fat. Reliance hasstuck to the upper region but could not make further progress. It could invite profit booking from short traders. There has been volume play at the Sail counter. BHEL could not advance much considering the good rise of the previous day.
Overall, you need to take into account the possibility of profit booking emerging on Tuesday, on account of the strident rise on Monday as well as week end considerations at NSE.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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