Markets to remain volatile

Deepak Sahijwala & Sanjay R Bhatia

A Slew of positive news flows has helped the BSE Sensex to move above the all-time high of 6151 to touch 6249.60 during intra-day trades. Positive results and guidance from Infosys, the decision by SEBI to allow margin trading from February 1 and interim tax sops from the finance minister has added the perfect icing to the cake. These positive news flows have renewed momentum on the bourses. During the course of the week the markets have continued to remain highly volatile, while volumes have continued to remain good, which is a positive sign. Traders and speculators have continued to build speculative positions in Old Economy FMCG stocks, and tech stocks. Even though FIIs have continued to remain net buyers, their sales have increased on account of selective profit booking. Similarly, mutual funds have also continued to remain net buyers during the course of the week

Technically, the markets have witnessed high levels of volatility amidst intermediate bouts of intra-day corrections. The market is likely to continue to remain volatile as the earnings season starts. The Q3 results are likely to decide the future trend of the markets, especially the tech stocks. Stock-specific action is likely to be witnessed. Overall, the sentiment continues to remain positively bullish and if the FII funds flow continue to remain buoyant in 2004, then the party on the bourses is likely to continue. On the upside, it is important that the benchmark BSE Sensex sustains above the 6151 level for new and higher peaks to be tested. On the downside, the 5550 level is an important support level.

CMC

The CMC stock moved in a range of Rs 41, touching an intra-day high of Rs 644 and an intra-day low of Rs 605 on the same day on January 5. It has continued to stay above the Rs 600 level and it is likely to test the Rs 666 level. On the downside, the Rs 600 level is an important support level.

HCL Technologies

The HCL Tech stock moved in a range of Rs 35.90, touching an intra-day high of Rs 326.90 on January 6 and an intra-day low of Rs 291 on January 7. On the upside, it continues to face resistance at the Rs 330 level. On the downside, Rs 269 is an important support level.

Infosys Technologies

Infosys moved in a range of Rs 427, touching an intra-day low of Rs 5,583 on January 1 and an intra-day high of Rs 6,010 on January 6. As we had indicated in our last issue, Infosys once again tested the Rs 5,939 level ahead of its Q3 results but profit booking has once again seen the Infosys stock fall. The positive Q3 results and raising of earnings guidance is likely to see the Infosys stock move up. It is likely to test the Rs 6,525 level. On the downside, the Rs 5,120 level is likely to act as an important support level.

NIIT

NIIT moved in a range of Rs 42.50, touching an intra-day high of Rs 282.40 on January 6 and an intra-day low of Rs 239.30 on January 7. Profit booking at higher levels has seen NIIT fall below its support level of Rs 249. Now, it is important that it moves above the Rs 249 level for it to once again test the Rs 292 level.

Polaris Software

Polaris moved in a range of Rs 24, touching an intra-day high of Rs 264 on January 1 and an intra-day low of Rs 240 on January 7. As we had indicated in our last issue, Polaris was able to touch the Rs 264 level after it moved above the Rs 250 level, but once again, profit booking at higher levels saw Polaris falling below the Rs 264 level. Now, it is important that Polaris moves and sustains above the Rs 264 level for any fresh rally to gain momentum. On the downside, the Rs 218 level is an important support level.

Wipro

Wipro moved in a range of Rs 158, touching an intra-day high of Rs 1,809 and an intra-day low of Rs 1,651 on January 6. Profit booking at higher levels has dragged Wipro down. It is now likely to test the Rs 1,836 level if it moves and sustains above the Rs 1,728 level. On the downside, the Rs 1,508 level could act as an important support level.

Nasdaq

The Nasdaq has continued to witness a steady rally during the first week of 2004, sustaining above its psychologically important 2000 level, which is a positive sign and augurs well for the future. As we had indicated in our last issue, it is on course to test the 2060 level. If it succeeds in moving and sustaining above the 2060 level it is likely to test the 2100 level. On the downside, the 1904 level is an important support level.