| After several sessions of indecisive range-trading, the market broke on Friday. The Sensex closed the week at 9742.58 points, down 1.29 per cent. The Nifty was down 1.41 per cent at 2940.6 points. The Defty was down 1.63 per cent as the rupee also declined. |
| Breadth signals were negative by Friday. Volumes dipped and the ratio of advances to declines was negative. The broad BSE 500 was down 1.45 per cent. Momentum indicators also plunged. |
| Outlook: This breakout from a trading range is probably just a short-term downtrend. There's strong support between Nifty 2910-2930 (Sensex 9670-9700) and the market should bounce from those levels. We're likely to see weaker prices for a couple of sessions however. |
| Rationale: Usually a valid range-trading breakout comes with a volume expansion even if it's a downside move. Momentum indicators are already moving into an oversold zone. Most of all, February is usually a strong because of optimistic punting on the Budget. |
| Counter-view: It is however possible that the downtrend will be stronger than apparent at first glance because of the damage to sentiment caused by the AAI strike, rising interest rates, etc. In that case, the maximum target projection would be till around Nifty 2880 (Sensex 9550). |
| Bulls & Bears: An examination of individual stocks presents a mixed picture. While some heavyweights such as ICICI, IPCL, SBI and ONGC appear to be bearish, there are many other stocks that look strongly bullish. |
| The list of bullish stocks includes Ashok Leyland, Asian Paints, Aventis Pharma , Cummins, Colgate, Cipla, Glaxo, Grasim, Sterlite, Sun Pharma, Tata Motors, TVS Motors and Tata Power. Obviously pharma and auto companies are well-represented in that list. |
| In addition, several stocks which took a hammering in the recent past appear to be close to a trend reversal. That list includes Andhra Bank, HPCL, IBP, Moser Baer, NTPC and Jet. |
| This mixed trend reinforces the feeling that the market is not likely to go into a deep retraction and it also makes it more likely that the correction will not last long. |
| MICRO TECHNICALS |
| Jet Airways Current Price: 970 Target price: 1015 |
| The stock has been hammered down from 1270 levels to a Thursday low of 891. It saw a big recovery on Friday on high volumes. It's likely to see high volatility over the next few sessions coupled to a likely recovery till 1015-1020 levels. Keep a stop at 950 and go long. Cover above 1015. |
| NTPC Current Price: 117 Target price: 127 |
| The stock has moved up on high volumes from 110 levels in the past 3-4 sessions. If it closes above 118, it has a probable target of 130. Keep a stop at 115 and go long. Cover above 127. The long-term trend is also looking good "� so it may be worth taking delivery for the next 3 weeks. |
| Sun Pharma Current Price: 770 Target price: 800 |
| The stock has a short-term target of 800 and this is likely to be achieved or exceeded given the strong volumes since the upwards breakout. Keep a stop at 740 and go long. Unfortunately there is a fairly high risk; the rapid movement has left no support close to the current price. |
| Sterlite Current Price: 1461 Target price: 1510 |
| The stock has a short-term target of 1510 and this may easily be exceeded given that there have been very strong volumes in the past two sessions when it's risen from 1310 to 1460. Keep a stop at 1430 and go long. |
| Tata Power Current Price: 483 Target price: 510, 550 (long-term) |
| The stock has started climbing on high volumes. It has a short-term target of 510 and a likely 15-session target of 550. Keep a stop at 470 and go long. Book partial profits at 510 and keep delivery on the rest for 3 weeks |
| (The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.) |
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