Book profit in Grasim Industries

B. Krishnakumar

AFTER an extended phase of sideway movement, the market saw a downward break last week. In tune with expectations, the BSE Sensex found resistance at the 3750-3850 range. After touching a high of 3759.96, the Sensex reversed sharply on Thursday to end the week on a rather subdued note at 3557.64.

The recent downward trend has resulted in the violation of the upward sloping trend line connecting the lows from 3096 and 3420. A decline below the swing low at 3420 points would impart further bearishness in the market. Considering that there is a significant amount of outstanding position still to be wound-up at the BSE, the unwinding of these positions could keep the market in a subdued note in the near term.

Existing holders could therefore use price upmoves to clip exposure in index stocks. Fresh buying may be deferred until the Sensex moves closer to the previous major low at 3096. Till such time, it would be safer for small investors to stay away from the market.

The week, the focus is on PentaMedia Graphics and Grasim Industries. While the outlook for PentaMedia appears relatively positive, the Grasim Industries stock could rule weak in the ensuing settlement.

The share price of PentaMedia Graphics has managed to rule firm despite the overall weakness in the technology stocks. A move past Rs 104 could be used to take long positions with a stop loss at Rs 88. On the contrary, a decline below Rs 83 could be used to take short positions in the PentaMedia Graphics stock.

In the case of Grasim Industries, the scrip has seen a sharp run-up in the recent weeks. It appears to have hit a temporary high at Rs 356. A decline below Rs 330 would lead to the onset of a short-term downtrend in the stock.

Existing holders could book profit if the stock declines below Rs 330. On the other hand, a move above Rs 357 could be used to take fresh long positions with a stop loss at Rs 330.

Recommendation follow-up

The price trend in HPCL and Polaris Software was broadly on course with last week's expectations. After an initial uptrend, which was basically a technical correction, the share price of HPCL turned weak in the last couple of days. A break below Rs 158 would infuse extreme bearish trend in the HPCL stock. On the contrary, a close past Rs 172 would impart some degree of bullishness.

Existing holders of HPCL stock could remain invested. A decline below Rs 158 could be used to lighten existing holdings. Short-term aggressive traders could take fresh long positions if HPCL moves past Rs 171.

As expected last week, the Polaris Software stock saw a short-term downtrend. Though the scrip declined below the support level of Rs 390-410 (mentioned last week0, the break was short lived. Polaris recovered ground and managed to close on a firm note on Thursday.

The overall trend in the Polaris stock continues to remain positive. A move past Rs 410 could be used to pick fresh exposures in the stock. However, a decline below Rs 365 would have bearish connotation. As of now, the price action in the next few days would decide the short term trend in Polaris.

(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.)