Positive trend in Nestle, ACC

B. Krishnakumar

AS expected last week, the stock market went through a downward corrective phase. Except for a strong rally on Tuesday, the market was on a subdued note during the week.

The ability of the Sensex to recover ground after inching below the key level of 3800 (mentioned last week) is a positive indicator. The downtrend last week has pushed the Sensex to the bottom of the current downward cycle. A short-term uptrend may now be on the cards.

The late recovery on Friday, after a weak opening, is also a positive indicator. As long as the Sensex stays above the 3774 level, the outlook for the market would remain positive. On the upside, a move past 4016 level would confirm the possibility of a short-term uptrend.

The focus this week is on Nestle India, ACC and MTNL. The short-term outlook for these stocks appear positive. Aggressive traders could contemplate long positions with a tight stop loss in these stocks.

Nestle: The Nestle India stock has been on a downtrend in the recent days. As the stock has moved to the bottom of the current downward cycle, the scrip could see a short-term rally.

Long positions may be contemplated, with a stop-loss at or below Rs 482, if the scrip moves past Rs 504 on Monday.

ACC: The short-term outlook for ACC too appears positive. The stock could touch an upside target of Rs 150 in the medium term. Existing holders could remain invested. Long-term delivery-based traders could take long position with a stop loss at or below Rs 98.

A break above Rs 119 would confirm the possibility of a move up to the target price of Rs 150. On the other hand, a decline below Rs 98 would blunt such a possibility.

MTNL: The MTNL stock could also see a firm trend in the near term. Existing holders could remain invested.

Fresh buying may be contemplated on evidence of support in the Rs 148-153 range.

Recommendation follow-up

As expected last week, the Dr Reddy's Laboratories stock was on a downtrend. As the major trend in the stock is still down, long-term investors could think in terms of booking profit. Any price uptrend could be viewed as an exit opportunity. Aggressive traders could contemplate short positions on price uptrend, with a stop-loss at or above Rs 1,470. Fresh buying may be deferred for the time being.

The price action in Himachal Futuristic was also broadly on course with previous week's expectations. In tune with the expectation of a weak trend, the stock receded to a low of Rs 1,166.6 and has since been on a recovery path. The underlying trend in the stock does not appear all that positive. Though it could move up in the near term, existing holders could use price rally to cut exposures. Fresh purchases may be deferred for the moment.

(Note: Recommendations in this column are based entirely on technical analysis of the past price behaviour of the scrip concerned. There is a risk of loss in trading.)