After last week’s strong rally, the bourses witnessed profit taking on selling by traders and speculators. Heavy selling was also witnessed by big institutions like UTI and a few FIIs to meet redemption pressure. Selling was seen across the board, especially in the index heavyweights and frontline tech stocks. FIIs have been major sellers in infotech stocks, due to their fears of a decline in future earnings, as a consequence of the overall slowdown in the USA and other developed countries. The lack of confidence amongst foreign companies who are hesitating to send their personnel to India due to the prevalent border tensions between India and Pakistan, is also a cause of worry for the FIIs, as this would reduce the earnings of infotech companies.

Technically, the benchmark BSE Sensex was unable to sustain itself above the level of 3320, as selling pressure pushed the markets down. The BSE Sensex has fallen below its 200-day moving average, which is a negative sign. As we had indicated in our last issue, FII investments could remain a cause for worry, and this seems to have come true as they continue to press sales on Indian bourses. The market is likely to retrace the lost ground due to a correction. On the upside, it could test the 3292 level and if it is able to move above this level successfully, we could see the markets post a rally. On the downside it would try to seek support at the 3217 level, and later at the 3125 level.

CMC
The CMC stock moved in a range of Rs 77 during the course of the week, touching an intra-day high of Rs 617 on June 13 and an intra-day low of Rs 540 on June 19. As we had indicated in our last issue, the CMC stock corrected itself after last week’s fall to rise above the Rs 615 level. The overall weakness on the bourses and especially in the infotech counters has affected sentiment on the CMC stock. The downward trend on the counter is likely to continue, with occasional bouts of corrections. Technically, the CMC stock is displaying a bearish outlook and is likely to fall to a range of Rs 377 to Rs 374.15 in the short run.

HCL Technologies
After moving in a narrow range in the recent past, the HCL Tech counter has moved in a range of Rs 26 during the course of the week, touching an intra-day high of Rs 228.60 on June 13 and an intra-day low of Rs 202.60 on June 19. The stock was unable to find support at the Rs 213 level, due to overall weakness in the sector. The HCL Tech counter has formed a positive divergence pattern and we could see a rally on the stock, if it is able to move above the Rs 210 level and if overall market sentiment for frontline tech stocks turns positive.

Infosys
The Infosys stock moved in a range of Rs 399 during the course of the week, touching an intra-day high of Rs 3,530 on June 13 and an intra-day low of Rs 3,131 on June 19. As we had indicated in our last issue, the stock was unable to move above the Rs 3,531 level, which was crucial for any rally to be witnessed. The stock could post a minor rally on the back of Infy’s banking division acquiring a treasury product division of US firm IQ Fin Systems. Technically, the outlook for Infosys looks bearish and it could fall to a level of Rs 2,426 to Rs 2,600 in the short run if overall sentiment for frontline tech stocks continues to remain negative.

NIIT
The NIIT stock moved in a range of Rs 30.80 during the course of the week, touching an intra-day high of Rs 278.80 on June 17 and an intra-day low of Rs 248 on June 19. As we had indicated in our last issue, the stock faces resistance at the Rs 274.65 level. However, it was unable to sustain itself at this level. In the present downtrend it is unlikely to move below the Rs 238 level. On the upper side it could test the Rs 265 level in a few trading sessions.

Satyam Computers
The Satyam stock moved in a range of Rs 32.70 during the course of the week, touching an intra-day high of Rs 247.90 on June 13 and an intra-day low of Rs 215.20 on June 19. It was unable to move above the crucial level of Rs 245, which, as we had indicated in our last issue, was necessary for a rally to unfold. On the downside the Satyam stock is unlikely to fall below the Rs 210 level. On the upper side it would try to test the Rs 236 level in a few trading sessions.

View the STRATSTAR FUND WIZARD

Nasdaq

Earning warnings by US infotech counters and the downgrade of earnings estimates by Morgan Stanley for IBM have seen sentiment on the Nasdaq turn weak. The Nasdaq could test the low of 1451.31 that it touched on September 19. The positive sign remains the minor positive divergence last week, which could result in a reversal in the downward trend in the next few months.

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