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Thursday, Aug 26, 2004

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Markets - Technical Analysis


Sideways movement

K. Premkumar

WEDNESDAY'S trading activity witnessed sideways movement. The sentiment reading of the tradable counters stands slightly bearish. Bull domination on Thursday is likely to change the sentiment reading to bullish. Otherwise, the prevailing bearish sentiment is likely to continue with added strength.

Nifty Futures Recommendation: The August contract opened with a bull gap of five points and went further by another three points. Later on, bears managed to restrict them from making any further gains. The August contract moved within a close band of 14 points. It closed with a gain of five points above Tuesday's close.

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Bulls were successful in initiating the uptrend in the August contract. However, this is likely to be under threat for Thursday. Bearish trigger level is given for the September contract and this is placed slightly away from its current level. In the normal course of trading on Thursday, this is unlikely to be triggered.

Stock Futures Recommendation: The composition of the top-10 tradable list remains intact. The ranking of the list too remains the same with no major changes. Trading activity in TCS was quite hectic on Wednesday with more than 14400 trades.

Bull move on Thursday is likely to terminate the downtrend in Infosys and Reliance. On the contrary, the uptrend in CNX IT and State Bank is likely to be under threat. Thursday being the expiry day for the August contract, fresh entry levels for all the counters are given for the September contract. Traders are left with six opportunities on either side of trading. Selling in Satyam is likely to be the best bet for Thursday's trading. Bearish trigger for this counter is placed very close to its last traded price. Bear pressure on Thursday is likely to initiate the downtrend in Satyam.

Cash Segment: There were no new entries or exits to the top-10 tradable list. The ranking of the list had some changes. Tata Motors moved to the third position followed by SAIL and Maruti.

Bear pressure on Thursday could be a threat to both the prevailing uptrend counters in the list. On the other hand, the downtrend in Infosys is likely to be terminated. Bulls are likely to have opportunities in four counters. Selling opportunities are likely to exist in five counters. Buying in Reliance is likely to be the best for Thursday's trading. Bullish trigger level is placed within two rupees from its closing price. Bull move on Thursday is likely to trigger the uptrend in Reliance.

(Note: All price levels refer to the absolute value of the shares traded on the NSE. There is risk of loss in trading.)

The author is a technical analyst and fund management consultant.

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