| A crash on Monday was followed by four more sessions of net losses. The Nifty closed down 5.71 per cent at 2945 points. The Sensex was down 5.55 per cent at 100085 points, while the Defty lost 6.56 per cent as the rupee travelled down substantially as well. |
| Breadth signals were poor. Volumes expanded with the crash. Advances were far outnumbered by declines. The BSE500 lost 6.3 per cent mirroring the absolutely dismal sentiment. |
| Outlook By making a downside breakout from a trading range on Monday, the market more or less confirmed that the long-term trend is now bearish. There is reasonably strong support at current level but the prognosis is negative. If the support at Nifty 2900 breaks, the next stop is likely to be 2775. On the upside, there's resistance at 3050 and again at 3200. |
| Rationale The current pattern indicates that the recovery that started on June 14 has terminated. The four-week intermediate uptrend was not sufficient to pull to pull the market above its previous record highs (Nifty 3775). So we appear to have a pattern of lower peaks with recent bearish multiple tops in the 3200 range "� that means a bear market. |
| Counterview Hope springs eternal. Maybe the next series of Q1 results will be good enough to bring the bulls back. Or the conflicts in the Middle East will suddenly wind up and the price of crude will plummet. In technical terms, a rise above 3200 would suggest that the intermediate trend is still alive. But it looks unlikely at this instant. Be braced for a lengthy period of net declines. |
| Bulls & Bears As stated above, bearish stocks far outnumbered bullish ones. Let's deal with the bulls first. The two pharma majors Cipla and Ranbaxy look reasonably promising. So does Apollo Tyres, Reliance Energy and Bank of India. |
| On the bearish side, the worst affected counters include Dabur, HCL Technologies, IPCL, ITC, L&T, Maruti and NTPC although you could pretty much stick pins at random into the list of quoted stocks and short. Two other stocks are worth mentioning. Polaris Software and Sterlite Industries did nothing notable in terms of price movements but both registered big volume expansions. This could be the precursor to a big move in either direction. |
| MICRO TECHNICALS |
| Bank of India Current Price: 89.05 Target price: 96 |
| The stock has moved against the market trend and registered a little recovery from around 80. There's enough strength for a pullback to around the 96 level where BoI will run into big resistances. Keep a stop at 85 and go long. |
| Cipla Current Price: 219.8 Target price: 240 |
| The stock may be about to make an upside break from a trading range. If it closes above 226, it will have a minimum target of 240. Keep a stop at 213 and go long. |
| Maruti Current Price: 711.25 Target price: 680, 665. |
| MUL appears to have pierced support at 716 in the last session. It could have a target of 665 or even lower. Keep a stop at 716 and go short. There's support at 680 so, you should partially cover around that mark. |
| NTPC Current Price: 107.75 Target Price: 97 |
| The stock is looking weak and it broke support at 111 in the last session. The target would be about 97. Keep a stop at 113 and go short covering below 100. If the stock closes below 97, go short again, with 97 as the stop. If a break below 97 occurs, NTPC could drop till 75 levels. |
| Polaris Software Current Price: 86.6 Target Price: 109 |
| The stock has oscillated between 83-91 in the past few sessions. But there's been a big volume expansion during this phase of range-trading. This probably means a big upmove is due. If the stock closes above 92, it has a minimum target of 110. Accumulate a delivery position with a perspective of about 3 weeks. |
| (The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.) |
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