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Friday, Oct 22, 2004

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Markets - Technical Analysis


Bear domination

K. Premkumar

BEARS were in total control of Thursday's trading activity. The sentiment reading of the tradable counters stands bearish. Bull move on Monday is likely to gain substantially, thereby, changing the sentiment reading to bullish. Otherwise, the prevailing bearish sentiment is likely to be further strengthened.

Nifty futures recommendation: During the open, the October contract gained five points. Bulls failed to capitalise on it as they yielded to bear pressure. The October contract moved within a band of 22 points registering an intra-day low of 1776.00. It closed with a loss of eight points with respect to previous close.

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Bear domination during the day led to the initiation of the downtrend in the October contract. The exit level for the initiated short position is placed closer to its current level. Bull domination on Monday has the potential to terminate the downtrend in the October contract.

Stock futures recommendation: The composition of the top-10 active counters list remains unchanged. The ranking of the list too remains the same with no major changes. The top three traded counters in this segment were Reliance, Satyam and Tata Steel.

Bull pressure on Monday could be a threat to most of the prevailing downtrend counters in the list. On the contrary, the lone uptrend counter — Infosys is likely to be terminated.

Selling opportunities are likely to exist in three counters. Buying opportunities are likely to exist in seven counters. Selling in ONGC is likely to be the best for Monday's trading. Bear move on Monday is likely to trigger the downtrend in ONGC.

Cash segment: There were no new entries or exits to the top-10 tradable list. The ranking of the list had some changes. Reliance moved to the top slot followed by SAIL and Infosys.

None of the counters in the list are in the uptrend. Except for the downtrend in SAIL and Satyam, all the other counters in the list to be under threat. Traders are left with four opportunities on either side of trading. Selling in ONGC is likely to be the best bet for Monday's trading. Bearish trigger level for this counter is placed within four rupees from its closing price. Bear pressure on Monday is likely to initiate a fresh downtrend in ONGC.

(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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