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Volatile movement

K. Premkumar

MONDAY's trading activity witnessed volatile movement. Nifty opened with a bull gap of four points and went further by another 14 points. The bears came back heavily to wipe out the early gains made by the bulls. The index finally closed around Friday's close. The sentiment reading continues to favour the bulls.

For Tuesday, the current trend is likely to continue in the normal course of trading. In case of a strong bear move there is a possibility of the current trend to be terminated. Irrespective of bull or bear domination on Tuesday, the sentiment is likely to remain in favour of the bulls.

Index Futures Recommendation: Initial hours of the day's trading saw the October futures contract gain by around 23 points. Later on the bears came back strongly to recover most of their losses. The October contract closed with a marginal gain of 4 point s with respect to Friday's close.

The exit level for the long position in the non-target -based style of trading is placed quite closer to its last traded value. Bear pressure on Tuesday has the potential to terminate the uptrend.

Scrip Recommendation: The composition and the ranking of the top-20 tradable counters remained intact. For those holding positions in Dr Reddy's and Moser & Baer may continue with the stop loss placed at Rs 921.95 and Rs 241.50 respectively.

The sentiment reading of the top-20 tradable counters remains bullish. Bear domination on Tuesday would reduce the bull count by a substantial margin. However, the sentiment reading is likely to remain mildly in favour of the bulls.

The existing downtrend counters in the tradable list are likely to be safe. Bear domination on Tuesday could be a threat to the following uptrend counters - Balaji Tele, HCL Tech, Infosys, L&T, Ranbaxy, Wipro and Zee Tele.

For Tuesday, trading opportunities are likely to exist only on the short side. This is likely to prevail in Balaji Tele and Zee Tele. Between the two, Balaji Tele is likely to be the best for Tuesday's trading. The counter is at present in the uptrend. I ts exit and bearish triggers levels are placed quite closer to its last traded price. Bear move on Tuesday has the potential to trigger these levels.

(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.