The Hindu Business Line : Positive outlook for M&M

THE market activity was rather lacklustre during the just concluded week. Both the Sensex and the Nifty have registered a net decline for the week. The magnitude of decline was much higher in the case of Sensex.

<>Sensex (3098.94): >Except for the rally on Wednesday, the Sensex lacked positive momentum during the rest of the week. The near-term outlook continues to remain weak for the Sensex. A break below 3080 would be an early indicator of further weakness and a drop below 3078 would lend further credence to the bearish view.

A drop below 3078 could push the Sensex down to the 2800-2850 band. At present, only a move above 3200 would negate the negative outlook while a close above 3230 would be a strong indicator of a further move up.

<>Nifty (992): >Similar to the Sensex, the outlook for Nifty too appears negative. A close below 985 would be a forewarning of a further drop to the 945-950 range. Alternatively, if the Nifty manages to close above 1010, without dropping below 985, it could lead to a further rally to the 1030-1035 range. As of now, a drop to the 950 level is the preferred view.

The focus this week is on Mahindra & Mahindra (Rs 87.7). The near-term outlook for the scrip appears positive. A move towards the Rs 92-95 band appears likely. Existing holders could remain invested with a stop at Rs 82. Fresh buying may also be considered with a stop loss at Rs 84. A close below Rs 82 would warrant closure of long positions and initiation of fresh short positions in the scrip.

<>Recommendation follow-up

>It was a case of a mixed bag as far as last week's recommendations were concerned. Contrary to expectations, the share price of Gujarat Ambuja Cement shot up during the week. The strong rally has somewhat blunted the earlier negative outlook.

Going by the recent price action, the share price of Gujarat Ambuja appears to have potential to move to the Rs 190-195 band shortly. Existing holders could remain invested with a stop at Rs 165. Fresh buying may be considered by traders if the scrip manages to seek support around the Rs 170-172 band.

The price movement in Zee Telefilms was almost in sync with last week's expectations. After a rally on Thursday, the scrip turned weak on Friday. The overall outlook for Zee continues to remain bearish. A test of the Rs 50-55 band appears likely. Existing holders could use price upmoves to reduce exposures in Zee. Fresh buying may be deferred for the time being.

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

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