| Another massive sell-off in mid-week meant that the broad market lost more ground but there was a partial recovery on Friday. The Sensex was down a nominal 0.65 per cent closing at 15,138 points while the Nifty lost about 0.98 per cent to close at 4,401 points. |
| The Defty lost 0.68 as the rupee gained again, after the RBI's latest monetary policy was released. The Nifty Junior was down 0.61 per cent. |
| The market breadth remained negative while volumes dipped through the week. The broad BSE 500 was down 0.44 per cent. The Bank Nifty was however, a gainer to the tune of 2.3 per cent on the basis of a relatively benign RBI policy. |
| The CNX IT dropped a disproportionate 4 per cent. Institutional attitude showed a divergence with domestic funds being net buyers while FIIs sold. |
| Outlook: One has to assume that the intermediate correction will continue. The Nifty has good support at 4300 and lower down, at 4200. The current chart projections suggest however, that the index could drop till a target of about 4075-4100. Volatility in terms of rapid directional change and big intra-day moves is likely. |
| Rationale: The downside breakout on July 27 came on massive volume and it was confirmed by the second sell-off on August 1. Volumes have since tapered off but this looks like a classic downside breakout where targets can be projected with some reliability. |
| There will be intra-day corrections inside the fall however and those could be quite sharp. Intra-day highs of 4450 or 4500 are likely "� there will be resistance at these two points. |
| Counter-view: There is current support at 4350, which has held over the past three sessions. If this support holds, the correction will be relatively short and not so deep. |
| However, the extremely negative breadth signals and the dimensions of the move suggest that this is unlikely. It would be prudent to be prepared for the downside target to be fulfilled. The correction started on July 24. If this is an intermediate downtrend and it looks that way, then the market will see net falls for the next couple of weeks. |
| Bulls & Bears: Apart from banks, which saw a relief rally, there is no strong sector as such. Upmoves if any, are likely to be stock-specific while downtrends could affect entire sectors. Among banks, Oriental Bank of Commerce is likely to outperform along with SBI. |
| Also ACC, Grasim and Ambuja looked to be slightly stronger than the overall market so there is some hope that cement stocks will not do badly. One would be expecting a bottoming out in IT stocks, which have moved down further than the market. But it may not come next week. Jet |
| Airways also looks promising. There appeared to be scattered bullish interest across IFCI, Reliance Communications and Maruti. |
| MICRO TECHNICALS |
| Asian Paints Current Price: 896.75 Target Price: 925 |
| The stock has made a bullish breakout on high volumes. It has a likely target of 925. Keep a stop at 892 and go long. It may be worth taking delivery and holding through a market downtrend because it has good defensive strength. |
| GMR Infrastructure Current Price: 832 Target Price: 865 |
| This stock is a trader's delight with sharp changes of direction and big moves on high volumes. It bottomed at 740 on Thursday and has started a recovery. A move till 865 seems likely "� it will run into selling pressure at that level. Keep a stop at 820 and go long. Cover at 860-plus. |
| IFCI Current Price: 60.7 Target Price: 68 |
| The stock is being driven by hopes of a stake-sale. It has completed a bullish formation on high volumes with a target of about 68. If it does achieve that target, the long-term trend will look very interesting. There will be selling pressure all the way from 59-64. Keep a stop at 57 and buy with a 10-session perspective. |
| Jet Airways Current Price: 734 Target Price: 765 |
| The stock appears to have bottomed and consolidated. It has a potential upside till 765 or a little higher. Keep a stop at 715 and go long. Cover above 760. The long-term trend still appears to be negative so, the target may not be fully achieved. |
| Reliance Communications Current Price: 548 Target Price: 575 |
| Strictly speaking, this is a range-trading formation but the range is very wide. Reliance Communications has the potential to move up to the 580 level without making a decisive breakout. On the downside, there is good support at 535. Keep a stop at 540 and go long. Cover above 570. |
| (The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.) |
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