MUMBAI, Oct 30: The Sensex remained weak throughout the week. Except the 124-points gap on Monday, it failed to show any positive trend. In fact, 80 per cent of the gain recorded on Monday were eroded on subsequent days. Although the Sensex showed a downtrend, it did not break the previous week's low of 2741 points and on weekly basis it gained 28 points. The Friday close however was weak.Outlook for the next week appears negative as most of the pivotals lack strength. The heaviest among the lot, Hindustan Lever is extremely weak. The position of ITC is no different. It closed on a weak note on Friday, and if it dips below Rs 693, chances of it falling to a level of Rs 670 are great.
State Bank can also test an all time low of Rs 152. The fall on the counter of Reliance can further accelerate if it dips below Rs 107. Other heavy weights like Hindustan Petrol, Bhel, Bajaj Auto, Larsen & Toubro and Hindalco are also expected to remain weak. The only pivotal where the position has improved marginally isMTNL. Since it has closed firm on Friday, which was supported by a huge jump in volumes, the outlook for the stock is comparatively better. As the position of most of the heavy weights is not promising, the outlook for sensex is undoubtedly bearish.
The immediate support for the sensex is at 2764 points. The second support, which is very crucial, is at 2713 points. This was formed during mid-December in 1996 and is 100 points away from the current level of 2812 points. If the sensex goes in for a bottom testing, it needs to shed another 100 points. And with pivotals showing a weak trend, chances of happening this in the coming days are great.
As such, traders should avoid fresh buying at the current level and those who have sold earlier can wait for some time to cover their positions.
Counters such as ABB, Ashok Leyland, Century, Cochin Refineries, Digital Equipment, Essar Steels, Escorts, Grasim, Hindalco, Mahindra & Mahindra, Oriental Bank of Commerce and Sesa Goa are expected to remain weak. Whileshort-selling can be done on counters like Esab India, Ranbaxy and Warstila NSD, profit taking should be considered on counters like Cadbury, Glaxo, German Remedies, Pfizer and Philips. At the current juncture, the number of stocks which appear strong is very less. Stocks like ACC, EIH, Raymonds, Tata Tea and Voltas should remain firm. Buying on these counters would be the best hedge in case the market moves against the expectations.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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