| Despite a massive mid-week sell-off, the indices made net gains after a fairly strong recovery on Friday. The Sensex ended at 10765.16 points after being down to 10376 at one stage on Thursday. |
| That was a week-on-week gain of 1.60 per cent. The Nifty was up 1.61 per cent at 3183.9 points, while the Defty was up just 0.84 as the rupee slipped versus the dollar. |
| Breadth signals were interesting. There was good volumes throughout the week with massive volumes on Wednesday and very decent volumes on Friday. By the weekend, advances outnumbered declines. The BSE 500 was up 1.77 per cent suggesting that trading interest in smaller stocks is back. |
| Outlook: The major indices have displayed classic island reversal formations "� these should be bullish in the short term. The upward target projections would be Nifty 3250 (Sensex 10925). On the downside, there's support at 3120. |
| Rationale: Apart from the island pattern itself, the recovery of Friday was backed by good breadth and volumes. The long-term trend is up, which makes it more likely that the bullish projection will work. |
| Counter-view: The volume of the Wednesday sell-off was appreciably higher than that of the Friday recovery. Thursday's lows (Nifty 3070/ Sensex 10376) were considerably below the apparent support levels. There is negative divergence on momentum indicators such as the RSI and the RoC. |
| Bulls & Bears: The upmove on Friday was pretty general, but it was led by a couple of sectors. Almost every IT major moved up sharply with CMC, Infosys, Satyam, TCS and I-Flex looking particularly good. Many major banking stocks also saw a strong recovery including State Bank of India, Punjab National Bank, ICICI Bank and Bank of India. |
| Besides, there was stock-specific investments across a wide range of counters including ABB, ACC, Bajaj Auto, Bharat Forge, Dabur, Gujarat Ambuja, Hindustan Lever, Hero Honda, MTNL, Punjab Tractor and Tata Chemicals. |
| There was heavy trading in all the new Reliance listings, but it is dangerous to make technical judgements with so little data. Sticking one's neck out, Reliance Natural Resources looked about the best in the short term. |
| MICRO TECHNICALS |
| ICICI Banking Corp Current Price: 614 Target Price: 630 |
| The stock is recovering after a sharp correction. It has a potential target of 640, but this is not likely to be achieved except on intra-day basis because it hasn't seen volume expansion. However, 630-plus is likely to be hit. Keep a stop at 609 and go long. Book profits anywhere above 630. |
| Reliance Natural Resources Current Price: 31.25 Target Price: 40 |
| The stock has climbed considerably from a base between 17.50 and 19. It has massive trading volumes, but that is normal in a new listing of this size. When it closed above 30, it set a probable target in the range of 40-42. All projections are more likely to be inaccurate with such little trading history. Keep a stop at 29 and take delivery with a 5-session perspective. |
| Satyam Computer Current Price: 815 Target Price: 830 |
| The stock has completed a flat-bottomed saucer formation. It has a likely target of 830 and it could move further on an intra-day basis. Keep a stop at 805 and go long. If Satyam Computer closes above 830 by Tuesday, then you could consider booking partial profit and looking for a possible upside till 850 by Friday. |
| TCS Current Price: 1763.65 Target Price: 1810 |
| The stock generated huge volumes in a 'buyers only' session on Friday. It is likely to comfortably achieve the projected target of 1810 and may go a lot further. Keep a stop at 1750 and go long. |
| MTNL Current Price: 162.35 Target price: 170 |
| The stock has made a breakout on a huge volume expansion. It has a minimum target of 170, which may be exceeded because of the promising formation and the extremely good volume expansion. Keep a stop at 156 and go long. |
| (The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.) |
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