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B. Krishnakumar

THE stock market movement was confined to a narrow range last week. During the holiday shortened trading week, market players appeared reluctant in enhancing trading exposures. Trading volumes dried-up during the week which indicates lack of speculative activity during the week.

Software heavy-weight Infosys is scheduled to come up with its financial performance shortly. The market perception of Infosys's financials would have a major influence on the share price movement of other software companies as well as the overall market sentiment.

Though the Sensex opened on a firm note on a couple of days during the week, the initial momentum tended to fade off as the day progressed. Even on Thursday, the Sensex shed most of its intra-day gains to close marginally up by about 10 points.

Technically, the market is still unable to move past the crucial resistance at the 3760 level. Going by the recent price action, there could be a short-term rally. However, if the Sensex fails to break above the 3600 level within the next few days, it would have major negative implications for underlying market sentiment.

With the earnings announcement season round the corner (in both American and domestic market), the near-term trend could turn very volatile. Existing holders could use price upmoves to reduce exposure in index stocks.

The focus this week is on Punjab Tractors and Tata Engineering. The near-term outlook for Punjab Tractors does not appear all that positive while the Tata Engineering scrip could see a short-term rally.

The share price of Punjab Tractors could slide towards the Rs.135-140 range shortly. Exiting holders could use intermittent price rally to book profit. Fresh buying may be considered once the scrip declines to Rs.135 level.

In the case of Tata Engineering, the scrip could see a short-term upswing. Existing holders could remain invested with a stop loss at Rs 116. Fresh buying may also be considered with a stop loss at Rs 117. A drop below Rs 116 would warrant closure of existing long positions while aggressive traders could also contemplate fresh short positions.

Recommendation follow-up

As expected last week, the share price of Hindustan Petroleum ruled firm on the back of increased trading volume. However, the price upmove in the last few days has not been all that robust.

Going by the price pattern over the last few days, it appears that the Hindustan Petroleum scrip is unlikely to see any sharp upswing in the near term. Existing holders could remain invested with a stop loss at Rs 280. Profit booking may be considered once the share price moves closer to the Rs 320-325 range.

Fresh buying in HPCL may be avoided for the time being. Long-term investors can contemplate fresh buying if slides towards the Rs 210-215 range. Very aggressive traders could take short positions if the scrip drops below Rs 280. On the other hand, fresh buying may be considered once the scrip moves past Rs 340.

(Note: Recommendations in this column are based entirely on Technical Analysis using Elliott Wave and Point & Figure theory of the past price behaviour of the scrip concerned. There is a risk of loss in trading.)

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