Positive trend in L&T and ACC

B.Krishnakumar

It was an eventful week at the stock market. The dawn of the new year - Samvat 2058 on Thursday was greeted by a sharp rally in the infotech stocks.

Index heavy-weights Infosys and Satyam logged 10 per cent gain which helped the Sensex close above 3147, the low formed on the day of the terrorist attack in the US.

Technically, the move past the 3100 mark is a very positive development. As mentioned last week, the move past 3110 provided upside momentum for the Sensex. However it would be a bit premature to conclude that a bear market low has been decisively established at 2594, recorded on September 21.

Going by the Elliott Wave Analysis, there is still a possibility of the index receding towards the earlier low established at 2594 point mark. Such a view would be blunted if the Sensex manages to close above 3360.

In the daily and weekly charts, there is still a case for the recent rally to be looked upon as corrective phase amidst an overall bearish trend. Going by Fibonacci retracement and projection techniques, the immediate target for Sensex is at the 3275-3300 range.

The focus this week is on cement majors ACC and Larsen & Toubro (L&T). The short term outlook for the two stock appears positive. Existing investors could hold on. Fresh buying may also be contemplated by short term traders.

In the case of ACC, the share price of the company could move past Rs.170 in the near term. This however hinges on the price action in the next few days.

A close above Rs.152 would strengthen the possibility of move towards Rs.170. Existing holders could remain invested while a move past Rs.152 could be used to take fresh long positions with a stop at Rs.140.

The positive outlook for L&T would stand validated if the share price moves past Rs.218. On the contrary, a decline below Rs.200 would diminish the possibility of a short term rally in L&T.

On the upside, the scrip could touch a target zone of Rs.235-240 in the next few weeks. A rally past Rs.218 would confirm such an eventuality. Existing holders could remain invested while fresh buying may be considered on price upmove past Rs.218.

Recommendation follow-up

The price movement in the pharmaceutical major Glaxo SmithKline was in line with last week's expectations. The overall trend in the stock continues to remain positive. The scrip appears well on course to touch the target price zone of Rs.335-340, mentioned last week.

A close past Rs.328 could be used to take fresh long positions in Glaxo. Existing holders could remain invested and use price move towards the target zone of Rs.335-340 to book profits.

Long term investors could wait for a while before tasking exposures as the scrip could see some sideway consolidation shortly. In the long term, the Glaxo stock could touch a target price of Rs.400.

(Note: Recommendations in this column is based entirely on Technical Analysis using Elliott Wave and Point & Figure theory of the past price behaviour of the scrip concerned. There is a risk of loss in trading.)