The Hindu Business Line : Trading to be range-bound; undertone remains bullish

Wipro and VisualSoft Technologies are scheduled to declare their second quarter results this week. The market expects better quarter-on-quarter results from the two.

THANKS to the stand taken by the Prime Minister, Mr Atal Behari Vajpayee, on the PSU divestment programme and the better-than-expected Infosys second quarter results, the stock market last week saw a relief rally. The market sentiment looked up also because the US indices — Nasdaq Composite and the Dow Jones Industrial Average — witnessed a modest recovery.

The domestic benchmark BSE Sensex gained by 2.23 per cent or 65.29 points to close at 2995.77 points on the week-end. The fact that the Sensex crossed the 3,000-mark and finished the week a shade below it was psychologically heartening for the optimists.

"The volumes have also improved despite institutions largely staying out of the market. Last week's bounce-back has bolstered the chances of value discovery process in select stocks as also bargain-hunting," observed Mr Darshan Mehta of moneypore.com.

A number of speculators have taken bullish bait. However, the funds have restricted their activity to portfolio churning. According to brokers and analysts, the confirmation of a bottom-out could be forthcoming this week.

"The market is likely to open higher this week. It may see a downward reaction mid-week, but close on a firm note," Mr Mehta felt. The indices were likely to move within a restricted range, say between 50 and 100 points, as the institutions and FIIs were unlikely to turn aggressive buyers, he added.

According to Mr Soumil Trivedi, a technical analyst, the Sensex last week "formed a possible reversal pattern". In Mr Trivedi's opinion, smart money has stepped in. But, the next 2/3 weeks will tell whether this flow is for a short-term to take advantage of the oversold market condition or for a long-haul investment.

For the Sensex, he felt the range of 2,915-2,930 might be viewed as major support range. "If it is not breached and the index stays above 3,130, then it is likely to see a sustainable rise ahead," Mr Trivedi observed.

Mr Mathew Easow of matheweasow.com felt the rally is likely to continue this week, led mainly by software stocks, with select PSU counters playing second fiddle. "The indications from the derivatives market also corroborate the improving sentiment for select tech and PSU counters," Mr Easow maintained. He hoped that the Nifty would cross the 985 level and close slightly below it.

Wipro and VisualSoft Technologies are scheduled to declare their second quarter results this week. The market expects better quarter-on-quarter results from the two. "As Mastek and MphasiS BFL have not let the market down, expectations for a better Q2 results for the top-rung and the second-rung tech stocks are in the air," Mr Mehta pointed out.

The market players expect that HDFC results, to be announced this week, will set a positive tone for the stocks of the banking and finance companies. The ICICI Bank and Punjab National Bank counters looked positive on the charts, according to some analysts. Fundamentally sound old economy stocks — particularly in the steel, cement, pharma and auto sectors — are likely to be bargain hunters' target.

According to Mr Easow and Mr Trivedi, for the retail investors, caution and discretion are the key for the week. The market might still not be out of the woods as only the speculators were ruling the trading ring and likely to have their hold on the market for some more time, the observers indicated.

Send this article to Friends by E-Mail
Comment on this article to BLFeedback@thehindu.co.in

Stories in this Section
Will the cost benefits transfer to investor?

Trading to be range-bound; undertone remains bullish

Hero Honda: To kick-start?

`Brand name is the strength' — Mr Milind Barve, Managing Director, HDFC Mutual

Infosys back to higher premium