Book profit in ACC and MTNL

B.Krishnakumar

THE ability of the Sensex to detach itself from the developments at the tech-laced NASDAQ Composite Index was a major positive highlight of the week's trading.

The move past the previous swing high of 4046 points indicates the presence of a relatively strong momentum in the market. And the Sensex has also managed to stay above the key support level of 3774, mentioned last week. A move past the key resistance level of 4053 level (mentioned last week) is a healthy sign.

These factors indicate the resilience of the Sensex amidst turbulent market conditions that prevailed in other global markets. In the present set-up, the indications are that the Sensex could remain firm in the following settlement. However, the Sensex has now reached the top of the current cycle. A short-term correction could materiliase shortly. The market sentiment could probably turn weak in the latter half of the ensuing settlement. Existing holders of Sensex stocks could contemplate profit booking in the event of a rally on Monday or Tuesday.

The focus this week is on ACC, MTNL and Himachal Futuristic. The near term outlook for the three stocks does not appear positive. Existing holders could lighten holdings in these stocks.

ACC: The share price of ACC has seen a steady run-up in the recent weeks. As mentioned a couple of weeks ago, the stock has neared the price target of Rs 150.

As the stock has neared the top of the current upward cycle, existing holders could now look for avenues to book profit in the ACC.

MTNL: Similar to ACC, the MTNL stock too moved up in the previous week. The stock has comfortably moved past the price target mentioned a couple of weeks ago.

Existing holders could book profit. Fresh buying may be contemplated once MTNL moves past the previous swing high of Rs 178.3.

Himachal Futuristic: The Himachal Futuristic stock could see short term weakness. Existing shareholders could book profit and contemplate re-entry later. Aggressive traders could contemplate short positions with a stop loss at Rs 1437.

A move past Rs 1437 would warrant closure of existing short positions and initiation of fresh long positions.

Recommendation follow-up

The price movement in Dr.Reddy's Laboratories, HDFC and BHEL were in line with previous week's recommendations. As expected, the share prices of the three companies ruled firm in the previous settlement. After a strong rally, HDFC stock reversed direction off a key resistance level of Rs 542 on Monday. Existing holders could book profit in HDFC. Fresh investments may be deferred for the time being.

The share price of Dr.Reddy's Laboratories moved past the previous week's price target of Rs 1375. It went on to touch a high of Rs 1,394 and has since been stuck in a narrow range. As the stock is in the midst of a downtrend, existing holders could use price upmoves to cut exposures in Dr.Reddy's.

The BHEL stock appears to be on course to touch the target zone of Rs 140-145 mentioned last week. Existing holders could remain invested and use price move past Rs 145 to progressively cut exposures in BHEL. Fresh buying may be deferred at the present point in time.

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