Barometers pass resistance zone

Technicals

Traded volumes were robust and slightly higher than the 10-day average. The breadth was positive as the advances to declines ratio on the BSE and the NSE combined was 3:2.

The capitalisation of the breadth was even more positive as the figures bare follow-up buying momentum in the index heavyweights.

The Nifty and the Sensex have conclusively surpassed the previous resistance levels and are consolidating their gains as the technology sector has started participating in the upmove after a brief hiatus.

The next minor resistance levels on the indices are at the 1567 and the 4878 levels on the Nifty and the Sensex, respectively.

On the lower side, expect good short-term support at the 1522 and the 4800 levels.

The participation by the index heavyweights imbibes confidence in the rally and the price / volume action shows an optimistic undercurrent "" which could mean follow up buying will continue.

Should the overseas markets remain positive, expect the domestic bourses to maintain their upturn.

The outlook for the markets on Tuesday is that of bullishness as the indices are showing a continued rising tops and bottoms formation on the charts and the money flow oscillators are showing a continued buying momentum.

I expect the technology, steel, automobiles, energy and cement stocks to outperform the markets. Any fall is likely to be corrective in nature and should be shortlived.

Trading is advisable on the long side and contrarian actions in trying to short sell the markets at this juncture are likely to be counter - productive.

Among stocks, ICICI Bank has almost completed it's corrective fall and is likely to see an accelerated upmove should it surpass Rs 231 levels with higher volumes and a conducive market sentiment.

Buying is recommended above Rs 231 levels with a stop-loss at Rs 226 levels and a profit target of Rs 236 / Rs 238 can be expected. Buy in the cash and derivatives segments.

Infosys has breached the Rs 4,630 resistance and closed above it with good volumes. I expect a rally up to Rs 4,840 levels in the short term.

Buying is recommended at the current closing levels and a stop-loss be maintained at Rs 4,665 levels. Buy in the cash and derivatives segments. Buying can be slightly more aggressive and with strict stop-losses.

Vijay Bhambwani

CEO, BSPLindia.com

The author is a Mumbai-based investment consultant and invites feedback at vijay@BSPLindia.com.

Sebi disclosure: the analyst has no exposure to the scrips mentioned above.