Positive signals emerging, but…

Deepak Sahijwala & Sanjay R Bhatia

The markets have managed to close above the psychologically important 3,000 level for six consecutive trading days, which is a positive sign. Earlier during the course of the week, the BSE Sensex continued to move in a range-bound trend, amidst increasing volumes. However, the broader indices were strong during the week due to a rally witnessed in mid-cap and banking stocks. A major paradigm shift in speculative positions has been seen as traders shifted their speculative positions from tech to banking stocks. A weakness has persisted in tech stocks due to the appreciating rupee, which is likely to affect tech revenues and also further dampen their already squeezed margins. Traders and speculators were seen buying into banking and a few Old Economy stocks. FII investments have also improved during the course of the week, and continued to remain net buyers. Mutual funds too were marginal buyers on the bourses.

The benchmark BSE Sensex has moved above the important 3,000 level. Now, it is important that the benchmark BSE Sensex stays above the 3,049 level for at least four trading days followed by 12 trading days for it to test the 3,085 level and later the 3,115 level. The lack of positive triggers continue to hamper FII investment, even though the same has improved marginally during this month. But higher FII inflows would be needed if the present rally has to sustain and continue. A normal monsoon could very well provide a trigger for the markets along with divestment of PSUs. On the downside, the 3,037 level could act as an important support level.

CMC
The CMC stock moved in a range of Rs 47, touching an intra-day high of Rs 507 on May 16 and an intra-day low of Rs 460 on May 21. It has fallen below its 200-day moving average, which does not augur well for the stock. A further downslide is expected. It is likely to find support at the Rs 445 level, but if this level is breached it is likely to test the Rs 425 level. On the upside, the Rs 500 level is likely to act as a resistance level.

Digital GlobalSoft
Digital has moved in a narrow range of Rs 35.85, touching an intra-day high of Rs 549 on May 15 and intra-day low of Rs 513.15 on May 21. It has failed to find support at the Rs 526 level and it is likely to test the Rs 463 level. On the upside, the Rs 531 and later Rs 548 level are likely to act as resistance levels.

HCL Technologies
The HCL Tech stock moved in a narrow range of Rs 16.35, touching an intra-day high of Rs 143.90 on May 19 and an intra-day low of Rs 127.55 on May 21. A minor positive divergence pattern is forming and if the formation gets completed a minor rally is expected in the immediate future. On the downside, it is likely to take support at the Rs 119 level. On the upside, it is likely to face resistance at the Rs 137 level.

Infosys Technologies
Infosys moved in a range of Rs 260, touching an intra-day high of Rs 3,047 on May 19 and an intra-day low of Rs 2726.35 on May 20. It is likely to find support at the Rs 2,653 level, but if this level is breached it is likely to test the Rs 2,300 level. On the upside, the Rs 3,070 level is a strong resistance level.

NIIT
NIIT moved in a range of Rs 26.90, touching an intra-day high of Rs 132.90 on May 16 and an intra-day low of Rs 106 on May 20. On the downside, the Rs 120 level is likely to act as an important support level On the upside, it is likely to face resistance at the Rs 131 level.

Satyam Computer
Satyam moved in a range of Rs 15.15, touching an intra-day high of Rs 179.40 on May 16 and an intra-day low of Rs 164.25 on May 20. It is likely to face resistance at the Rs 174 level and if it moves and sustains above this level it is likely to test the Rs 194 level. On the downside, the Rs 152 level is likely to act as a strong support level.

Wipro
Wipro has moved in a range of Rs 96.75, touching an intra-day high of Rs 948.95 on May 16 and an intra-day low of Rs 852.20 on May 21. On the downside, the Rs 800 level is likely to act as an important support level. On the upside, the Rs 981 level is likely to act as a resistance level.

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Nasdaq

The Nasdaq witnessed selling pressure on higher levels due to profit booking. It has also fallen below its psychologically important level of 1,500, without completing the 12-day cycle. Now, it is important that it moves above this level for it to test the 1553 level. On the downside, the 1,480 and later the 1,434 levels are likely to act as support levels.