Correction expected

Deepak Sahijwala & Sanjay R Bhatia

The bullish fervour in the markets continued amidst good volumes, as traders and speculators remained active in index heavyweights, pharma and Old Economy stocks, while booking profits in tech stocks ahead of Q1 results to be declared by next week. This is in anticipation of lower returns expected due to the depreciating dollar, SARS and margin pressures. Overall, FII inflows continued to remain positive after last month’s record fund inflows, as they continued to remain net buyers on the Indian bourses. However, mutual funds continued to remain net sellers.

Technically, the benchmark BSE Sensex has continued its bullish aggression and is likely to test the 3679 level in a few trading sessions. The only sign of worry continues to remain the failure of the Sensex to sustain at higher levels while displaying signs of fatigue. A broad-based correction is likely to set in, but this may happen only after the FII fund flows begin to slow down. On a decline, the Sensex could find support at the 3504 level, while on the upside, the 3679 level is likely to act as a resistance level, and if this level is successfully crossed it is likely to test the 3726 level.

CMC
The CMC stock moved in a range of Rs 60.90, touching an intra-day high of Rs 492 on June 27 and an intra-day high of Rs 431.10 on July 2. It failed to sustain above its 200-day moving average and has since fallen below its important support level of Rs 444. Now, it is important that it moves above the Rs 444 level, otherwise it is likely to test the Rs 417 level. On the upside, it is likely to face resistance at the Rs 480 level.

Digital GlobalSoft
Digital moved in a narrow range of Rs 38.90, touching an intra-day high of Rs 456.90 on June 30 and intra-day low of Rs 418 on June 26. On the upside, it is likely to face resistance at the Rs 457 level. On the downside, it would find strong support at the Rs 393 level.

HCL Technologies
The HCL Tech stock moved in a range of Rs 13.30, touching an intra-day high of Rs 156.30 on June 30 and an intra-day low of Rs 143 on June 26. Even though it moved above its resistance level of Rs 155, it was unable to sustain at this level. It is once again likely to test the Rs 155 level. If it succeeds in moving and sustaining above this level, it is likely to move to Rs 163 level. On the downside, Rs 138 is likely to act as a support level.

Infosys Technologies
Infosys moved in a range of Rs 209.50, touching an intra-day low of Rs 3,140.50 on June 26 and an intra-day high of Rs 3350 on July 2. On the upside, it is likely to face resistance at the Rs 3,500 level. On the downside, the Rs 3,004 level continues to be an important support level.

NIIT
NIIT moved in a range of Rs 20.55, touching an intra-day low of Rs 132.85 on June 26 and an intra-day high of Rs 153.40 on July 2. It has successfully moved above its 200 day moving average and as we had indicated in our last issue, the upward trend has resumed and it moved above the Rs 144 level. On the upside, it is likely to face resistance at the Rs 194.50. On the downside, the Rs 129 level is an important support level.

Satyam Computer
Satyam moved in a range of Rs 14.70, touching an intra-day low of Rs 182 on June 26 and an intra-day high of Rs 196.70 on June 30. Even though it moved above the Rs 195 level, it failed to sustain above this level. It is once again going to test the Rs 195 level, if it succeeds in moving and sustaining above this level for 12 trading days it is likely to test the Rs 228 level. On the downside, the Rs 170 level is likely to act as a support level.

Wipro
Wipro moved in a narrow range of Rs 58, touching an intra-day low of Rs 902.10 on June 26 and an intra-day high of Rs 960.10 on June 30. It is likely to face resistance at the Rs 981 level. On the downside, the Rs 800 level could act as an important support level.

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Nasdaq

As we had indicated in our last issue, the Nasdaq has resumed its upward rally after last week’s corrective phase ended. On the upside, if it succeeds in sustaining above the 1686 level, it is likely to test the 1741 level. On the downside, the 1600 level is likely to act as an important support level.