Time symmetry lends hope

B. Krishnakumar

IN accordance with expectations, the Sensex ruled firm in the previous week.

The downward correction expected during the latter part of the week did not, however, materiliase. Going by the recent price pattern, it appears that the Sensex is consolidating ahead of a sharp rally.

It took about 66 trading days for the Sensex to complete the first phase of decline from the high of 6151 to a low of 3830. After a brief rally, the Sensex commenced its next leg of decline, lasting for 67 trading days, from a high of 4791 points (on September 13) to a low of 3491 points on October 19.

As there is time symmetry, the Sensex could have completed its downward correction at 3491 points on October 19. Elliott Wave Analysis also supportive of the onset of a new uptrending phase.

The immediate target zone for the Sensex is at the 4300-4400 range. Though there could be a short term correction, price dips could be used to build long positions in index stocks. A strong move that pushes the Sensex past the next resistance zone of 4300-4400 would affirm the possibility of the start of a new bull phase.

The focus this week is on Bata India, Wartsila NSD and Grasim Industries. The share prices of these companies have seen a sharp run up in the recent weeks. Existing holders could remain invested as there is still some steam left in these stocks. Price upmoves could be used to book profit.

The share price of Bata India (Rs 64.35) could touch a price target of Rs 75-80 in the near term. Existing stakeholders could hold on to their exposures and contemplate partial profit booking once the stock enters the target price zone.

The share price of Grasim Industries (Rs 263.6) could move up to its immediate target price zone of Rs 290-300. Existing holders could remain invested and book profit once the stock moves closer to the target zone. Aggressive traders could also contemplate short positions once Grasim moves past Rs 290.

Recommendation follow-up

The price action in ACC and MTNL were on line with last week's expectations. The share price of ACC comfortably moved past the earlier mentioned target price of Rs.150. Existing holders could book profit and contemplate re-entry on declines. Evidence of support at around the Rs.130-140 price band could be used to build fresh exposures.

As mentioned in earlier weeks, the MTNL stock too has moved past the earlier mentioned target price. The scrip continued to rule firm last week. Fresh buying in the stock may be contemplated once MTNL moves above the previous swing high of Rs 178.3. A failure to move past Rs.178.3 would warrant closure of existing long positions.

Contrary to expectations, the Himachal Futuristic stock ruled relatively firm. The move past Rs.1437 has infused short term uptrend in the stock. Existing holders could remain invested and use price rally to progressively trim holdings on Himachal Futuristic. A decline below Rs.1490 would infuse short term weakness in the stock.

(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.)