October 26: The Sensex opened with a gap of 122 points on Monday and by the end of day, registered a gain of 105 points. Such a huge gap has occurred after a period of almost five years. Almost all the major povitals were close to their upper limit. Volumes remained comparatively low as traders could not get a chance to make a fresh entry as market opened with a gap.The sensex gain could have been much higher had Hindustan Lever contributed. It was merely up by Rs 3. In fact, it fell by Rs 65 from the day's high of Rs 1,655. ITC was up but gains were negligible compared to other heavy weights like Reliance and SBI. If HLL and ITC showed similar gains, the market would have gone up by another 50 points.Whatever is the gain, Monday's rally has given a major boost to the sentiment and the short-term outlook has improved drastically. Except HLL, all the other major counters look good. The stock lacks strength and is expected to head downward.
The position of another heavy-weight, ITC is comparatively better.Although the stock has gained Rs 13 on Monday, it is yet to show a major bull run. For a major uptrend, the stock should immediately cross Rs 726 and close above this level on Tuesday. If that happens, it can gain another 5 per cent quickly.
The position of other counters is however very comfortable. Rally on the counter of Reliance should continue on Tuesday. The same can be said about State Bank, Larsen & Toubro, Bhel, ACC, and Telco. While rally on the counter of State Bank can last upto Rs 175, current momentum can push up L&T by another Rs 7. ACC can jump up to Rs 980 and Tisco can touch Rs 84.
Even if HLL fails to perform, the strengthening position of these counters should have a positive impact on the sensex. Overall, the sensex is expected to remain firm on Tuesday. Even if a reaction occurs, the short-term from the current level will continue to be bullish.
As the sentiment is expected to remain bullish for the next few days, traders can take a long position on counters like Castrol, CromptonGreaves, Raymond, and Voltas. Raymond as well as Voltas have given a fresh buy signal. Rally on these two counters are expected to last for some more days.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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