| The pressure of settlement forced a sell-off this week. But after three bearish sessions, the market bounced back. The Sensex settled at 7680.22 points , down 1.29 per cent on the week. The Nifty closed at 2357.05 for a loss of 1.11 points. The Defty was down by 1.42 per cent as the rupee dropped. |
| Breadth signals were indeterminate. Volumes were low, if we discount the usual spike on settlement day. The BSE 500 was down 1.19 per cent. The overall put-call ratio was 0.75, which is slightly on the oversold side. However by Friday, advances outnumbered declines. |
| Outlook: The market is most likely to range-trade this week, through a band of around Nifty 2300-2380 (Sensex 7600-7800). If there is a move outside this fairly wide zone, it's somewhat more likely to be down rather than up. |
| Rationale: The chart pattern seems to be that of a typical period of range-trading. There are fairly clear resistance (Nifty 2380) and support ( 2300) zones established and there is a lack of volume, which is again typical for a period of range-trading. The PCR is mildly oversold but this will probably correct with more calls being traded rather than through rise in spot prices. |
| In terms of timing, the market appears to have gone through an intermediate trend reversal after 15 weeks of trading up. It's possible that the selling pressure will intensify but right now, it appears more likely that range-trading and consolidation will be the pattern rather than outright bearishness. |
| Counter-view: The key element as usual, is FII and to a lesser extent, FI attitude. The firangis were strong buyers on Friday, after being net sellers through most of last week. If they continue to supply liquidity in the new settlement, then the market may break upwards from these levels. |
| Bulls and bears: Most big stocks moved up on Thursday and Friday. There are two or three sectors, which could continue to run in recovery mode. One is PSU banks such as Bank of Baroda, Bank of India, Corporation Bank and Oriental Bank. |
| These stocks have taken a hammering recently and a reversal seems to be on the cards. There appears to be some speculative buying in refiners such as BPCL, HPCL, Chennai Petro, Kochi Refineries and also in GAIL. |
| The third possible sector is IT stocks though here the trend is less clear "� HCL Tech and Satyam seem bullish but Infosys and Wipro are not. Among the Tata group, both Tisco and Tata Motors are bottoming out but recovery may take some few sessions. |
| Apart from sectors, specific stocks such as ABB, ACC, Arvind, Apollo Hospitals, Bajaj Auto, Bata, Bombay Dyeing, Century Essel Propack, Indian Rayon, Jindal Steel, L&T, Mahindra, MRF, Jindal Saw, Sesa Goa all seem to be fairly bullish. |
| MICRO TECHNICALS |
| BANK OF INDIA Current price: 123.9 Target price: 135 |
| The stock is making a v-shaped recovery on high volumes after a drop from 145 levels to around 110. There's room for the stock to move smoothly up till around the 135 mark where it will face heavy resistance. Go long, keep a stop at 119 and book at least some profits above 133. |
| JINDAL SAW Current price: 399 Target price: NA |
| The stock seems poised to break decisively upwards from a period of range-trading with an upwards bias. If it closes clear of 405, it will have a target of about 435. The long-term trend is clearly bullish as can be perceived from the weekly charts. Go long, keep a stop at 385. |
| SESA GOA Current price: 728 Target price: 755 |
| The stock's making a v-shaped recovery after a sharp drop from 775 levels. Volumes picked up in the last session. It has a minimum target of around 755 and a fair chance of moving further. If it closes above 760, it could hit the 800 mark again. Go long, keep a stop at 720 and book some profits above 750. |
| NTPC Current price: 99 Target price: 107, 155 |
| The stock has jumped on strong volumes in the past two sessions. It has resistance around the 100-mark. If it closes above 100, it is likely to set up a target of about 107. The long-term weekly charts suggest that there has been a breakout from a saucer formation and that the long-term target is around 115. |
| INDIAN RAYON Current price: 563 Target price: 590 |
| The stock has seen strong buying in the last two sessions. It has enough momentum to pull back to the 590 levels at least. Around 585-590, it will face strong resistance. If it closes above 590, it would be very bullish. Go long, keep a stop at 555 |
| (The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.) |
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