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Wednesday, August 01, 2001

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Downtrend terminated

K. Premkumar

THE bulls dominated the proceedings on Tuesday. This led to the termination of the downtrend in the index. The intra-day movement in Nifty was around 13 points. It closed higher with a gain of 15 points over Monday's close. The sentiment reading of t he tradable counters remained bearish.

In the normal course of trading on Wednesday, the sideways trend in the index is likely to continue. However, the bear domination has the potential to reinstate the downtrend in the index. Bullish trigger level is still placed far away. The sentiment is also likely to remain the same irrespective of a bull or bear move.

Index futures recommendation: The trading activity in the futures segment was quite impressive on Tuesday. The volumes in the nearby August contract clocked a new-high by crossing seven lakhs. The movement in the August contract was around 14 points. It closed with a gain of five points with respect to Monday's close.

Bull domination during the day terminated the downtrend in both the target and non-target-based style of trading. The short position in both the styles of trading exited with a loss of around 10 points. The sideways trend in both the styles of trading is likely to continue on Wednesday. Bullish and bearish trigger levels in both the styles of trading are placed quite far away from its current level.

Scrip recommendation: The composition of the top-20 list underwent a change. Reliance Petro gained entry with the exit of VSNL. The ranking of the list also had some changes. Wipro moved to the top slot and Himachal moved to the 10th position.

The market sentiment reading of the tradable counters stands slightly in favour of the bears. Irrespective of a bull or bear move on Wednesday, it is likely to remain the same with a slight change in its value.

Further bull domination could be a threat to the downtrend in Reliance Petro. On the other hand, bear domination could be a threat to the uptrend in ACC.

Traders are left with limited opportunities for Wednesday's trading. Buying opportunities are likely to exist in Hindustan Lever and L&T. A lone selling opportunity is likely to exist in ACC.

The best among the above is likely to be the buying in Hindustan Lever. This counter is at present in the sideways mode. Bull pressure on Wednesday has the potential to initiate a fresh uptrend in this counter.

(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 Chennai-based technical analyst and fund management consultant.

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