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Sunday, Nov 24, 2002

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Positive outlook for Sterlite Opticals

B. Krishnakumar

THE stock market sentiment was distinctly bullish during the week gone by. The Sensex has also convincingly broken above the downward sloping trend line, which also indicates bullish undertone.

Sensex (3141.61): Technically, the Sensex ruled firm in line with last week's expectations. The form and the recent momentum behind the rally seem to suggest that the market may be in the early stages of a new bullish market. Break past the resistance level at 3227 would be an indicator of further upside potential. As of now, it would be safer to take long positions on price dips while existing holders of long position could remain invested with an appropriate stop loss.

The focus this week is on Sterlite Opticals and United Phosphorous. The near-term outlook for Sterlite Opticals appears positive while the United Phosphorous stock could seek lower levels in the near term.

The share price of Sterlite Opticals appears to be headed towards the immediate target zone at the Rs 75-80 band. Existing holders could remain invested with a stop loss at Rs 62. A move past Rs 69.5 could be used to take fresh long positions with a stop at Rs 64.

In the case of United Phosphorous, an upward sloping "Wedge" pattern is talking shape. The scrip is likely to see a sharp move once the price breaks out of this pattern. Going by the recent price pattern, the scrip is likely to see a downside breakout from the Wedge pattern. Existing holders could look for opportunities to book profit.

A drop below Rs 174 would be an early indicator of further downside in United Phosphorous. The bearish view would warrant reassessment only if the scrip moves above Rs 190.

Recommendation follow-up

The price movement in ONGC and Moser Baer was almost in line with last week's expectations. As anticipated, the share price of ONGC ruled weak and touch a low of Rs 341 on Thursday. The overall outlook for the scrip continues to remain weak. Aggressive traders could take short positions once the share price of ONGC drops below Rs 340. Existing holders could use intermittent price upmoves to reduce exposures in the company. Fresh buying may be avoided as the scrip could slide to the Rs 310-320 band shortly.

Though the share price of Moser Baer ruled a bit firm, it has not negated the view that the scrip is headed towards the Rs 125-130 band. As of now, the scrip could move up to the immediate resistance at the Rs 160-162 band. Existing holders could remain invested with a stop loss at Rs 148. A move towards Rs 160 could be used to trim holdings. Close below Rs 148 could be used to take fresh short positions in Moser Baer.

(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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