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Fears
of a war between India and Pakistan have seen Indian bourses
crash during the course of the week. The markets have fallen
by over 7 percent since terrorists attacked an armed forces
base in Jammu on May 14. Traders and speculators continued
to unwind their long positions due to the warlike situation
on the border and also due to excess margin requirements to
maintain their long positions. FIIs continued to stay on the
sidelines, preferring to stay out of Indian markets. Mutual
funds continued to be net sellers on the bourses to meet redemption
pressures.
The overall sentiment on the bourses is negative for all sectors
since an Indo-Pak war would affect all sectors of industry.
The infotech sector would also be affected, more so since
orders from abroad would stop flowing to Indian infotech companies.
Hence we could see more selling on the infotech counters if
the warlike situation worsens.
Technically, the markets have turned bearish and we may see
them tumbling further. The markets could generally remain
news and event driven, but in the event of the situation on
the border easing, the bourses could change direction rapidly.
The benchmark BSE Sensex could either slide further or remain
sideways and rangebound in the next few trading sessions till
a clearer and positive picture emerges from the border.
CMC
The
weakness on the CMC counter continued during the course of
the week. It has moved in a range of Rs 91.90, touching an
intra-day high of Rs 687 on May 17 and an intra-day low of
Rs 595.10 on May 21. Technically, the CMC stock continues
to display a weak trend, and as we had indicated in our previous
issue, the CMC stock has fallen below the Rs 633 level. The
stock is likely to find support at Rs 594.15, but is unlikely
to stay above that level for a long time. If a war breaks
out, the stock could fall initially to a level of Rs 540 and
later to the Rs 450 levels.
Digital Globalsoft
The downtrend continues in the Digital stock. It moved in
a range of Rs 125.60, touching an intra-day high of Rs 741.90
on May 16 and an intra-day low of Rs 616.30 on May 22. As
we indicated in our last issue, the Digital stock has fallen
below the level of Rs 683 as it was unable to stay at the
Rs 728.35 level. The stock is likely to find support at the
Rs 549 level.
Infosys
Last
week’s rally on the Infosys counter was short lived due
to the present crisis on the border. Even though the Infosys
stock was able to move above its resistance level of Rs 3,836,
it was unable to stay above this level during the week and
has fallen to a level of Rs 3,651 on May 22. It has moved
in a range of Rs 300, touching an intra-day high of Rs 3,855
on May 16 and an intra-day low of Rs 3,555 on May 22. Though
it is finding some value buying at lower levels, it would
be difficult for the Infosys stock to post a rally. Rather,
it is likely to fall between the Rs 3,482-3,520 level or move
in a rangebound manner.
NIIT
The
downward trend and weakness on the NIIT stock continued during
the course of the week. It has moved in a range of Rs 53.40,
touching an intra-day high of Rs 263.45 on May 16 and an intra-day
low of Rs 210.05 on May 21. It is likely to fall to a level
of Rs 210 if the present trend continues on the bourses.
Satyam Computers
The
Satyam stock moved in a range of Rs 47.65, touching an intra-day
high of Rs 252.65 on May 16 and an intra-day low of Rs 205.
The Satyam stock has faced more selling pressure than any
other frontline tech stock due to the continuing underlying
weakness. It has also fallen below its 200-day moving average,
which should see more selling pressure on the stock. It is
likely to find temporary support at the Rs 202 level.
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the STRATSTAR FUND WIZARD
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Nasdaq
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| After
last week’s smart rally, profit booking at higher levels
eroded the gains on the Nasdaq. The Nasdaq failed to stay
above the 1719 level for four trading days, as profit
booking saw it falling below this level on the fourth
day. This does not augur well for the Nasdaq. The Nasdaq
will again have to move above this level and then stay
above it, initially for four trading days and later for
12 trading days to initiate any rally. |
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