Market to stay within the 4,200-4,500 range.
The market swung sharply up in one session and plunged through the rest of the week. The Nifty closed at 4,352.3 points for a nominal week-on-week loss of 0.2 per cent. The Sensex lost 0.5 per cent to close at 14,564 points. The rupee lost ground steadily and the Defty lost over 2 per cent as a result. The FIIs were heavy net sellers and the local institutions were net buyers.
Breadth signals turned sharply negative on Friday. Volumes improved slightly from the past week. The Bank Nifty and the CNXIT both registered gains but almost every other sector lost a little ground. The Junior was down 0.5 per cent while the BSE 500 was down 0.3 per cent.
Outlook: The short-term trend is clearly negative. The intermediate trend may be changing for the worse. Next week could see either range-trading (with small gains) or it could see significant losses. Big gains seem unlikely. Most likely the market will stay inside 4,200-4,500.
Rationale: The intermediate uptrend is 8 weeks old - enough time to reverse though it could run up for another month. It has seen lower tops last week of 4,522 (September 2) versus 4,649 (August 12). But there is excellent support below current levels, at 4,300 and a secondary support between 4,150-4,200. On the upside, there's resistance building above 4,500 and probably at 4,450 as well.
The last three weeks have been characterised by very low volumes. Any improvement in volumes could result in a breakout in either direction. A close below 4,150 would confirm an intermediate trend reversal. A close above 4,650 would set up a target of 4,750-4,800.
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Bulls & bears: There were astonishing volumes generated by two new listings, Resurgere and Austral. Apart from that, banking saw a sell off on Friday after a strong week. The CNXIT held its ground though individual counters like Wipro and Educomp were weak.
A drop in global crude prices translated into buying sentiment for BPCL, HPCL and IOC while a cut in Indian ATF prices meant a boost for Jet Airways and Deccan. Apart from these, there were isolated winners such as Aban, Biocon, and Ranbaxy saw price collapse after the open offer closed.
MICRO TECHNICALS
Aban
Current price : Rs 2,294.7
Target price: Rs 2,500
The stock is coming off a low at Rs 2,000 with very strong volumes. A V-shaped recovery till the Rs 2,500 level could occur. Keep a stop at Rs 2,200 and go long. Be prepared for daily moves of up to 10 per cent. If the stock closes above Rs 2,500, it could run till Rs 2,650.
Cipla
Current price: Rs 233.45
Target price: Rs 220
The stock has been sold down quite heavily from the Rs 240-plus level. It has a potential support at Rs 225 and this is the minimum downside target. It is more likely to fall till the Rs 220 level however, where a secondary support will hold.
Jet Airways
Current price: Rs 540.90
Target price: Rs 570
The stock has jumped from 450 in just five sessions on decent volumes. At Rs 520, it completed a bullish breakout with a potential target of Rs 570. However there is powerful resistance between the current price and Rs 575. This could mean big intra-day moves and not much in the way of net gains. Keep a stop at Rs 530 and go long. Book profits over Rs 565.
RCom
Current price: Rs 394.5
Target price: Rs 420
The stock appears to have found reliable support between Rs 380-400 and this looks like a stable bottom formation. It has the potential to jump to Rs 420 on the slightest volume expansion. The signal would be a close above Rs 400. Keep a stop at Rs 385 and go long with a 10-session perspective.
(The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.)