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B. Krishnakumar

AFTER a weak close on the first day of the new year, the stock market sentiment perked up as the week progressed. The Sensex ended the week on a firm note with Reliance Industries and Infosys playing a major role in the up move. The waning threat of war and a firm trend at the American bourses also had a positive impact on domestic market movement. The week ahead would, however, be critical.

Software heavy-weight Infosys Technologies is scheduled to hold its board meeting on January 10. Along with the earnings for the quarter ended December 2001, the earnings guidance issued by the company would play a major role in determining the future course of market movement.

Besides, the developments regarding the quantum of fund allocations by the FIIs would also influence the stock market activity. With quite a few critical factors at play, volatility at the stock market could increase in the ensuing weeks. Small investors would, therefore, be better off by staying away from the market in the near term.

Technically, the short-term outlook for the Sensex would hinge on the price action in the next few days. In the longer-term picture, the Sensex appears to have the potential to move towards the 3600-3700 range. However, there is a stiff overhead resistance at around the 3515 level. If the Sensex moves above 3515, a further rise towards 3700 may materialise.

However, a failure to close above 3515 could push the Sensex towards the 3100 mark. After some consolidation, the Sensex is expected to recover towards the 3600-3700 range thereafter.

The focus this week is on ACC and Rolta India. The ACC scrip (Rs 169) has been on a steady uptrend for quite some time now. However, the upside potential from current levels appears rather limited. In the best case scenario, the scrip could edge past Rs 180 and turn weak thereafter.

On the other hand, a failure to move above Rs 181 in the ensuing week could push ACC back towards Rs 135. Given this backdrop, existing holders of ACC could reduce exposures once it moves past Rs 180. Traders could contemplate short positions on evidence of weakness at around Rs.185-195 level.

In the case of Rolta India, the near-term trend appears to be weak. Existing holders could trim holdings in the company. Fresh buying may, however, be considered if the scrip closes above Rs 132. Till such time, it would be better to refrain from taking long positions in Rolta.

Recommendation follow-up

The price movement in GTL was in line with last week's expectations. After an initial uptrend, the share price of the company closed the week on a subdued note on Friday. The near-term outlook for GTL continues to remain weak.

Existing holders could look for opportunities to reduce exposure in GTL. The scrip could slide to the Rs 115 level and a close below Rs 115 would push the scrip to Rs 100. Given the weak outlook, fresh-buying may be avoided. Price upmoves could be used to reduce exposure and initiate short positions.

(Note: Recommendations in this column are 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.)

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