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Sunday, Nov 03, 2002

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Book profit in Tata Steel

B. Krishnakumar

AFTER a sharp slide the week before, the stock market sentiment turned distinctly bullish in the just-concluded week. The sharp recovery in the share price of Reliance Industries and Hindustan Lever provided the much-needed impetus for the market rally. Infosys and ITC did not quite share the overall market enthusiasm witnessed over the past few days.

Sensex (2950.58): The Sensex managed to stage a recovery after having touched a low of 2828.48 on Monday. The overall price move since this low does not indicate the start of a new bull run. The recovery appears more like an upward correction to the recent slide. On the upside, the Sensex could face resistance at the 3030-3050 band. Technically, only a close above 3230 would negate the negative outlook for the Sensex. As of now, it would be safer to use price upmoves to book profit in index heavy weights.

The focus this week is on a clutch of companies from the Tata group - Tata Engineering, Tata Steel and Titan Industries. While the outlook for Tata Engineering and Tata Steel does not appear all that positive, the share price of Titan Industries could seek higher levels.

The upside potential for Tata Engineering appears limited from current levels. It could face resistance at around Rs.150-155 band and could slide to lower levels thereafter. Ideally, the share price is expected to drop to Rs.120-125 range in the near term. Existing holders could use price upmoves to reduce exposures in the company. Fresh buying may be avoided.

Similar to Tata Engineering, the share price of Tata Steel too is expected to slide to lower levels. The upside potential from current levels appears limited. The scrip could drop to the Rs 100-110 band shortly. Existing holders could therefore look for avenues to reduce exposures in Tata Steel.

As mentioned a few months ago, the share price of the company has declined below the then mentioned target level of Rs 69. The scrip now appears to have the potential to touch the Rs 70-75 band shortly. Existing holders could remain invested while fresh buying may be considered on a move past Rs 64.

Recommendation follow-up

Contrary to expectations, the share price of ONGC managed to rule firm. The failure to break below Rs 350 would not have triggered a short position in the scrip. Considering the recent upward momentum, existing holders could remain invested with a stop at Rs 380.

Very aggressive traders could contemplate long positions if ONGC manages to move above Rs 400. On the downside, a drop below Rs 362 would negate the positive outlook and would warrant liquidation of existing long positions in the counter.

(Note: The analysis and opinion expressed in these columns are based on the technical analysis of the past price behaviour. Analysis and price targets are based on the Elliott Wave Analysis. There is a risk of loss in trading)

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