| After soaring to new all-time highs, both the Sensex and the Nifty eased downwards after a couple of profit-booking sessions before the Muhurat. |
| The Nifty closed on Friday at 3676.8 points for a nominal week-on-week gain while the Sensex closed at 12723.59 points for an equally nominal loss. The Defty made a more appreciable gain of 0.4 per cent as the rupee continued to strengthen. |
| Breadth signals remained poor as they have been through this rally. The BSE 500 actually lost a little ground and advances were consistently outnumbered by declines. |
| The FIIs maintained a strongly net-positive attitude (with a little selling on Friday) while mutual funds were steady net sellers. |
| Outlook The short-term outlook in the new Muhurat is somewhat negative. The correction that started on Wednesday may continue. There's support at Nifty 3625 and lower down, at Nifty 3450. On the upside, there's strong resistance at 3725 and beyond. |
| Rationale The rally has come on average volumes and been backed by poor breadth signals. Momentum indicators such as the RSI, and RoC have moved down even as the major market indices advanced. |
| A price target of roughly Nifty 3750 has been achieved with the intra-day high of 3742 on Thursday. We won't get another breakout without some degree of volume expansion. |
| Counter-view The initial Q2 results have been encouraging. If the trend continues, it may prove to be a driver for more volumes. A close above the 3740 level could be very encouraging. |
| The F&O settlement will probably mean that market-focus stays narrow but it may prove to be a driver for cash gains in a high-weight F&O segment due to optimistic rollovers. |
| Bulls & bears Investment patterns are likely to remain fairly stock specific due to the Q2 results season. It appears that earnings projections were quite optimistic because several companies (TCS, Wipro, Grasim, HDFC Bank, Hindalco, Satyam) have delivered good results without being propelled into orbit. |
| Given the plethora of IT stocks above, the expectations from that sector were unrealistic after Infosys declared its results. There are several stocks that look strong. |
| For example, ABB, Dabur, Sail, Airtel and CMC are looking good. Banking seems to have gone off the boil "� Oriental Bank has taken a hammering and so has Bank of Baroda though BoB may have bottomed. |
| Tata Steel has started generating huge volumes without seeing a major change in price as the Corus deal comes into focus. Auto stocks look quite weak Bajaj Auto is down a lot on poor Q2 results, while Hero Honda and Maruti shares are also net losers. |
| MICRO TECHNICALS |
| Tata Steel Current Price 508 Target Price 535 |
| The stock has generated massive volumes as the news of the Corus bid hit the market. But the price has barely changed. There's room for a burst till the 535 levels and there's solid support just below current zones. If the stock closes above 535, it will probably rise up until 565. Keep a stop at 500 and go long. |
| ABB Current Price 3484 Target Price: 3625 |
| A clear breakout occurred after the stock closed above 3300 level completing a bullish formation. An upside target of 3625-3650 can be projected. Keep a stop at 3340 and go long. Be prepared for massive intra-day volatility. |
| Bank of Baroda Current Price 267 Target Price |
| The stock reacted from highs in the 285 region to dip till 261. It seems to have turned around on Friday. Maybe worth a small position because there's room for a climb back to about 285. Keep a stop at 260 and go long. |
| CMC Current Price: 667.7 Target Price: 720-735 |
| The stock has moved up sharply on expanding volumes. At 657, it made a breakout. We could make optimistic target projections of 725. Keep a stop at 655 and go long. Book some profits above 700. Assume that there will be large intra-day volatility. |
| Dabur Current Price 146.75 Target Price: 160-165 |
| At current prices, the stock is testing the limits of a resistance zone between 140-150. If it clears 150, it would complete a bullish formation with a target of 160-165. Keep a stop at 140 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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