BEARS gained control of the initial hours of trading on Wednesday. However, they could not maintain their hold till the close. The sentiment reading of the tradeable counters stands bearish.
Bull domination on Thursday is likely to reduce the bear count by a considerable margin, thereby resulting change in the sentiment reading. On the contrary, the prevailing bearish sentiment is likely to be further strengthened.
Nifty Futures Recommendation: The September month contract opened with a bear gap of six points and went down further by another 57 points. During the later session, bulls made a strong comeback and recovered most of their losses. The September contract closed with a loss of 12 points over the previous close.
Initial bear move led to the termination of the uptrend in the September contract. The long trade exited with a substantial profit of around 170 points. Bearish trigger level remains unchanged. Bull domination on Thursday has the potential to reinstate the uptrend in the September contract.
Stock Futures Recommendation: There were no new entries or exits to the top 10 tradeable list. Reliance moved to the top slot and ICICI moved to the seventh position.
Most of the counters in the list are likely to be under threat. Bears are unlikely to have any opportunity for Thursday's trading. Buying opportunities are likely to exist in six counters. The best is likely to be the buying in Reliance. This counter is in the downtrend. The exit and bullish trigger levels for this counter are placed closer to the current level. Bull move on Thursday has the potential to trigger these levels.
Cash Segment: The composition of the top 10 active counters list had a change. Satyam gained entry with the exit of SRF. The ranking of the list too had some changes.
Bear move on Thursday is likely to terminate the uptrend in India Infoline and Satyam. On the other hand, the downtrend in Sterling Biotech is likely to be under threat.
For Thursday, a lone opportunity is likely to exist on either side of trading. This is likely to exist in Reliance on the long side and Satyam on the short side. Between the two, the best bet is likely to be the buying in Reliance. Buy level for this counter is placed within three rupees from the closing price. Bull pressure on Thursday is likely to initiate a fresh 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.