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Bombay index nearing critical support, seen ranged

Indian stock-markets are seen south-bound in the short term but will continue to be in a trading range once the slide is arrested, technical analysts said on Tuesday.

India's most widely tracked equity benchmark, the Bombay Sensitive index is expected to move in a narrow range over the next month and a break-out from a 450 point-band was unlikely, they said.

"We are nearing around 3,285 points support level, from where it has bounced back several times," said G Devanathan, strategist and technical analyst with Kantilal Chhaganlal Securities, adding it could hold.

"But if that level is breached the index could fall to as low as 2,800," he added.

The index closed up 0.12 per cent at 3,335.08 points on Tuesday.

Chartists said the index had not showed any significant trends since hitting a minor peak at 3,759 points in May.

"I see the index continuing in a consolidation pattern over the next three-to-four weeks," said Vidur Pendharkar, a Bombay-based technical analyst, who felt that the marker would be limited to the 3,100-3,550 points range.

He felt that the index would find support from a lower trendline in a rising channel formation on the monthly chart.

Another analyst said the index would be ranged between 3,260 and 3,525 points. "The index will be volatile if it breaks out on either side of this range," said Hitendra Vasudeo of stockmechanics.com.

"We could see a breach of the lower range, resulting in a test of the critical 3,096 level," he said.

Analysts said the support at 3,260 points was on account of a trend reversal earlier this month from that level.

"On the candlestick chart, we saw a reversal following a doji formation and this inflexion point should continue to provide support," said Vinod Sharma, research head at Anagram Stockbroking, Ahmedabad.

A Doji pattern is formed when the open and close are at the same level in any trading period, and the formation is considered to be neutral, reflecting the indecisiveness of the market.

TISCO SLIDE SEEN LIMITED

Tata Iron and Steel Company, India's biggest privately-owned steel company, which has lost over a third of its value since the start of June, was close to a bottom as it was showing divergence from its oscillators, chartists said.

"The stock should find support around the 2000 low of 85 rupees," said Vasudeo.

The stock dipped to a 2001 low of Rs 89.60 on Tuesday, but its 14-day Relative Strength Index, despite being in the oversold territory was not forming a new low, analysts said.

"The support around the Rs 81-85 level also comes from a gap on the daily and the weekly charts in April-May 1999," said Anagram's Sharma.

Padmalaya Telefilms, a television content provider, was seen rising after breaking a Rs 149.75, Vasudeo said.

The target for the current rally was Rs 70 -- an earlier top struck in May, he said.

The stock closed 5.58 per cent higher at Rs 63.35 on Tuesday.

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