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Bear domination

K. Premkumar

MONDAY'S trading witnessed a bear domination. Index fell by around 15 points initially. Later on, the bulls managed to make a partial recovery. It closed for the day with a loss of around eight points with respect to Friday's close. The trend in the i ndex remained sideways. The market sentiment reading of the tradable counters continue to remain bearish.

In the normal course of trading on Tuesday, the sideways trend is likely to continue. Bear domination has the potential to initiate a fresh downtrend in the index. Bullish trigger level is still placed far away from the last traded value. The prevaili ng bearish sentiment is likely to continue irrespective of a bull or bear move.

Index futures recommendation: The activity in the futures segment was very dull. The cumulative volume on Tuesday was around one-fifth of the usual volume. The movement in the nearby July future contract was around seven points. Initial gains by the b ears could not be held. The July contract closed with a loss of one point with respect to Friday's close.

The downtrend in both the target and non-target-based style of trading is likely to continue on Monday. The exit and bullish trigger levels are placed quite far off from its current level.

The stop loss for the short trade in both the styles of trading is placed at a break-even level.

Scrip recommendation: There were no entries or exits to the top-20 tradable list. The ranking of the list remained the same with no noticeable changes.

The market sentiment reading of the top-20 tradable counters stands in favour of the bears. Bear domination on Tuesday could further strength the prevailing bearish sentiment. On the other hand, it is likely to remain the same.

Bull domination could be a threat to the downtrend in State Bank of India and VSNL. The uptrend in Digital, HCL Tech, Hind Lever and Wipro are likely to be under threat in case of a bear domination. Hence, traders holding positions in these counters wi ll have to closely monitor their price movements.

Buying opportunities for the bulls are likely to exist in ACC and State Bank of India. Selling opportunities are likely to exist in Digital and Wipro. The best bet for Tuesday's trading is likely to be the selling in Digital. This counter is at presen t in the uptrend. Its exit and sell trigger level is placed quite closer to its last traded value. Further bear pressure on Tuesday, has the potential to reverse the prevailing trend in this counter.

(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.