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Picking up the threads again

Jayanta Mallick

EVEN though brokers remain ``uneasy'' about life after badla, the stock market seems poised for an upward move this week. In the week gone by, the Sensex cruised ahead by around 100 points, not an insignificant gain considering the troubled times. The 30 -share benchmark index closed at 3,655.03 against the previous week-end close of 3,559.77.

Market analysts and observers foresee the Sensex crossing the nearest resistance level at around 3,790. However, they feel it is unlikely to breach the next resistance level at 3,950.

``It is significant that last week saw break-outs, both on closing and high-low bases, on two days amid a trend of rangebound activity continuing for the past few weeks,'' said Mr Vivek Mahajan, an analyst.

According to Mr Mahajan, the upward correction, which is on for the last five weeks, may continue for another week or so. ``The mild rally in old economy stocks is showing signs of exhaustion.''

The core sector stocks are likely to lead the market this week. He opines, among the old economy shares, cement counters are going through a consolidation phase. Some of them are likely to drive the Sensex up. The outlook for Tata Steel appears to be goo d.

The transport sector, particularly Ashok Leyland and Tata Engineering, may see buoyancy. ``According to charts, Ashok Leyland is on the threshold of a bull phase. For Tata Engineering, the worst seems to be over.''

The market does not expect any change in the current sale and buy pattern this week. ``UTI and other MFs have been selling consistently, while foreign institutional investors (FIIs) played contrarians at lower levels,'' said Mr Mathew Easow of Mathew Eas ow Research Securities.

This week may prove that the fears over rolling settlement are unfounded. The PSU stocks, which are candidates for divestment, may see steady buying and a rise in prices.

``FII buying now is stock-specific. Though their buying is somewhat geared to old economy shares, some of them have been indicating that they are ready to buy momentum shares, such as Zee Telefilms and Global Telesystems at lower levels. For example, Cre dit Lyonnais appears bullish about Global Telesystems in the Rs 170-185 range,'' Mr Easow noted.

A large section of brokers feels that the possibility of creeping acquisition by the Tatas in Tata Engineering may keep the stock busy. Speculation over fresh open offers or buyback in a few counters may also influence their prices.

As the impact of the Drug Price Control Order on individual pharma companies is not clear yet, analysts feel prices of pharma stocks may send mixed signals. According to Mr Sharad Jhunjhunwala of Badribishal Chiranjilal, J.K. Jhunjhunwalla & Co, the arbi tage opportunity would be reduced.

``But the badla rate is likely to be higher by around 3-4 per cent over the last week's average rate of eight per cent.''

Tech stocks in the domestic market are likely to remain sensitive to the Nasdaq, which remained critically poised over the week-end at 2,198, just below the multiple-resistance level of 2,200, Mr Easow observed.