The Hindu Business Line : Initial gains not held

THE bulls managed to gain on Monday. The day's market action reduced the bear count by a considerable margin. However, the sentiment reading of the tradable counters is mildly bearish. A bull move on Tuesday is likely to change the sentiment reading in its favour. On the other hand, the prevailing bearish sentiment may be further strengthened.

Nifty futures recommendation: The January month contract opened with a bull gap of six points and went further by another three points. Bulls failed to capitalise on it as they yielded to bear pressure. The January contract moved within a band of 28 points. It closed lower with a loss of 18 points over Thursday's close.

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The initial bull move led to the termination of the short position in the January contract. The short trade exited with a substantial profit of 160 points. The re-entry level has been placed closer than the bullish trigger level for the contract. Bear domination on Tuesday has the potential to re-instate the downtrend.

Stock futures recommendation: The composition as well as the ranking of the top-10 tradable list remains unchanged. The top-three traded counters in this segment were Tata Steel, Satyam and Maruti.

Except for the downtrend in Infosys, all the counters in the list are likely to be under threat. Selling opportunities are likely to exist in ONGC and Reliance. Buying opportunities are likely in Maruti and State Bank.

The best among them is likely to be the selling in Reliance, which is in the uptrend. The exit and bearish trigger levels for this counter are placed closer to its current level. A bear move on Tuesday may trigger these levels.

Cash segment: There were no changes to the top-10 tradable list. The ranking of the list too remains intact. The exit level for the downtrend in Zee Tele continues to remain at 163.70.

Bull domination on Tuesday is likely to terminate the downtrend in ACC and State Bank. On the contrary, the uptrend in Reliance and Tata Steel may be terminated. Bears are likely to have an opportunity in two counters. Buying opportunities are likely to exist in four counters. Selling in Reliance is likely to be the best bet for Tuesday's trading. This counter is in the uptrend. The exit and sell levels for this counter are placed within Rs 2 from its last traded price. Bear pressure on Tuesday is likely to reverse the prevailing 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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