Financial Daily from THE HINDU group of publications
Sunday, Apr 14, 2002
Markets - Commentary
Positive trend in Sterlite Optical
THE stock market sentiment recovered a bit during the week gone by. After a weak start, the sentiment perked up following the announcement of Infosys's financial performance.
Led by Infosys, a host of software stocks moved up during the week. The share price of Digital, Mastek and Infotech Enterprises managed to register significant gains during the week.
The rally in the Sensex was, however, weighed down by the weak trend in old-economy heavyweights ITC and Hindustan Lever. Both these stocks witnessed a subdued trend for major part of the week and managed to post a modest recovery on Friday.
Viewed in the backdrop of the sharp recovery in share price of technology stocks, the market appears to be pleased with the financial performance of Infosys. The company managed to achieve market expectations and the earnings guidance too was not all that negative.
Technically, however, the upmove over the past few days does not inspire much confidence. The recovery from the low recorded on April 9 appears to be more corrective in nature. It does not fit into the realm of a bullish move.
The immediate resistance for the index lies at the 3560-3575 range. Beyond this, the 3650-3675 range could offer resistance to the Sensex. The corrective nature of the rally would remain in force unless the Sensex manages to see a sharp rally in the next few days.
The focus this week is on Sterlite Optical and GlaxoSmithKline. Both these stocks have been recommended in the past. In the case of Sterlite Opticals, it was observed a few weeks ago that the scrip would move towards the Rs 200 mark.
The rally towards the Rs 200 mark appears to have commenced now. Existing holders could remain invested with a stop at Rs 120. Fresh buying may also be contemplated once the scrip moves past Rs 145. Traders may also consider taking long positions in the derivatives market segment.
A few months ago (refer edition dated November 18, 2001), it was mentioned that the GlaxoSmithKline stock would touch Rs 400. The scrip is now on the verge of surpassing the price target of Rs 400. Last week, it touched a high of Rs 393 and closed lower at Rs 383.
Going by the recent price action, the near-term trend in GlaxoSmithKline stock continues to remain positive. Existing stakeholders could remain invested while fresh buying may also be considered with a stop at Rs 360. The stock would be more suited for investors willing to take delivery rather than short-term speculators.
The price action in Archies Greeting, National Aluminium and Glaxo India was right in line with last week's expectation. The share price of all the three stocks ruled firm.
In the case of Archies Greeting, the share price managed to move very close to the projected target range of Rs 146-150. The scrip touched a high of Rs 143.5 on Tuesday and turned a bit weak thereafter.
The outlook for Archies, however, continues to remain positive. The scrip is likely to touch the projected price target of Rs 146-150 in the near term. Existing holders could remain invested with a stop at Rs 105. Aggressive traders could contemplate long positions on evidence of support at the Rs 125-128 range.
(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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