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Nifty plunges

K. Premkumar

FOR the fourth successive trading day, the stocks plunged down. Nifty sharply fell by around five per cent within few minutes of Monday's trading. The index-based stocks hit the circuit breaker and was trading around the same level throughout the day.

Nifty closed with a loss of around 48 points with respect to Friday's close. The market sentiment reading of the tradable counters stands strongly in favour of the bears.

For Tuesday, the downtrend is unlikely to be disturbed. Since, both the exit and bullish trigger levels are placed very far away from its current level. The strong bearish sentiment prevailing in the market is likely to continue on Tuesday also.

Index futures recommendation: The day's proceedings in the futures segment was totally controlled by the bears. Bulls were unable to make any recovery during the day. The nearby September contract opened with a bear gap of 5 points and went further dow n by another 55 points. It closed just two points above the day's low.

The short position in the non-target based style of trading is placed in much safer position. Its exit and bullish trigger levels in both the target and non-target based style of trading is placed far away from its last quoted value.

Scrip recommendation: The composition and the ranking of the top-20 tradable counters remained unchanged. For traders holding positions in Castrol, Mukta Arts, Sterlite Optical and VSNL, the stop loss is placed at 253.95, 72.30, 148.05 and 200.90 respec tively.

All the counters in the tradable list are currently in the downtrend. The prevailing bearish sentiment is likely to continue on Tuesday also, irrespective of bull or bear domination.

Bull domination on Tuesday could be a threat to the downtrend in Dr Reddy and ITC. So, traders holding position in the above two counters will have to closely watch their price movements.

Bear pressure prevailing in the market has placed both the exit and buy trigger levels for the existing counters in the tradable list quite far away. Thus leaving the trader with no fresh opportunity for Tuesday's trading.

(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.