Resistance at 5,125, support at 5,000.
The post-Budget bullishness continued after Holi. It appears the intermediate trend is headed north. The Nifty climbed to a high of 5,118 points before closing at 5,088.7 for a week-on-week gain of 3.38 per cent. The Sensex was up 3.44 per cent at 16,994 points. The Defty gained 4.4 per cent as the rupee strengthened to below Rs 45.80 to the dollar.
Breadth was solidly positive. There was a pickup in cash trading volumes. FIIs bought strongly, registering net purchases of over Rs 3,800 cr. However, domestic institutions were heavy sellers to the tune of over Rs 2,400 crore. Smaller stocks outperformed. The BSE 500 was up 3.94 per cent while the Midcaps gained over 6 per cent and the Nifty Junior was ahead by 5.6 per cent.
Outlook: The Nifty has now established rising lows and rising peaks to confirm a turnaround in the intermediate trend. However, it’s hitting resistance above 5,100, at around 5,125. In the short-term, it could consolidate by range-trading for several sessions between 5,000-5,150. There is a 10-session target of somewhere between 5,200-5,300.
Rationale: Institutional inclinations indicate that there will be further tussles at the current price between bulls and bears. Chart patterns indicate that the intermediate trend is up – there have been successive higher tops and bottoms. There is a lot of resistance at 5,100 plus and it will probably take buying from both sets of institutions to overcome.
Counter-view: The intermediate trend reversed after February 9 so, it’s been running up for roughly 4 weeks. It could be flattening and heading into another phase of extended range-trading, or even a downtrend. Sluggish momentum indicators and a flattening 200 Day Moving Average suggest that this is happening. A break out past 5,125, preferably past 5,150, would confirm a strong intermediate trend. Long traders could wait for that signal.
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Bulls & Bears: Last week’s trading saw bulls cycling through several sectors, booking profits and moving on. IT underperformed and banks more or less matched the Nifty.
Automobiles, auto ancillaries, cement, power-equipment and sugar, went up in various sessions. In the banking sector, PSUs attracted more attention through most of the week but private banks did well on Friday. IT was buoyed by stronger performance from smaller stocks. Metals had a mixed performance with signs of weakness by the weekend.
Auto stocks such as Tata Motors and Hero Honda delivered outstanding returns. But by the weekend, there was a lot of profit booking and Maruti in particular, seemed weak.
Sugar saw the opposite seesaws as did real estate. Both sugar and real estate started weak and finished strong with several stocks in each sector showing promising chart patterns by the weekend. There were other winners scattered across various sectors. The more prominently bullish scrips included Suzlon, Petronet, Ambuja Cement, Essar Oil, Gujarat NRE and Gail.
MICRO TECHNICALS
Bank of Baroda
Current Price: Rs 594.75
Target Price: Rs 630
The stock has seen a jump followed by profit-booking, and another bounce from decent support. It should test resistance at Rs 630-Rs 635 again. Keep a stop at Rs 590 and go long. Increase the position between Rs 600-Rs 605 and reset the stop to Rs 600. Clear the position beyond Rs 630.
Petronet
Current Price: Rs 79.9
Target Price: Rs 85
The stock’s up on high volumes, clearing resistance just below current price. The projected target would be at least Rs 85, which would be a new high. There’s resistance at Rs 82- Rs 83. Keep a stop at Rs 77 and go long. Increase the position beyond Rs 83. At Rs 85, book 50 per cent profit and reset the stop to Rs 83 since there’s a good chance of reaching Rs 90.
Purvankara Projects
Current Price: Rs 109.9
Target Price: Rs 115
The stock has seen a sharp jump on higher volumes. It has the potential to test resistance at the minimum target of Rs 115. Keep a stop at Rs 105 and go long. Book at least 50 per cent profit at Rs 115 and reset the stop to Rs 112. Clear the position at Rs 120.
Shree Renuka Sugars
Current Price: Rs 181.3
Target Price: Rs 190
Massive volumes ahead of the bonus have boosted prices. There’s resistance at the minimum target of 186, where the 200-Day Moving Average is hovering. Expect a move till Rs 190 or further, beyond Rs 200. Keep a stop at Rs 177 and go long. Add to the position above Rs 186. Book 75 per cent profit at Rs 190 and reset the stop to Rs 186.
Tata Motors
Current Price: Rs 794.25
Target Price: Rs 770
The stock has strong volume action and shot up from Rs 720 to Rs 830 in just two sessions. It has since seen profit-booking. There’s good support at Rs 790 but Fibonacci calculations suggest a drop till secondary support at Rs 770. Keep a stop at Rs 800 and short. Increase the position below Rs 790. Clear the position between Rs 770- Rs 775.
(The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.)