| The settlement came in a buoyant market with prices closing at near-record levels. The Sensex closed at 14282.72 points for a rise of 0.70 per cent. The Nifty was up 1.41 per cent at 4147.7 points. The Defty was ahead by 1.55 per cent as the rupee gained on speculation about another rate hike. The Bank Nifty dropped 1.25 per cent and the CNX IT was up 1.74 per cent. |
| Breadth signals were average. Volumes expanded by about as much as you expect on settlement day. |
| Advances outnumbered declines and the BSE 500 was up by 0.72 per cent. Institutional sentiment was mixed. FIIs were net positive through the week while domestic mutual funds were net negative. |
| Outlook: By definition, the outlook remains positive since major indices hit new highs (the Sensex did not beat its previous intra-day record but it closed at a record level). We can project a near-term target of about Nifty 4200. |
| However momentum signals are slowing. Expect volatility and intra-day corrections to the 4060 level at the least. |
| Rationale: The Nifty has just broken out of a trading range between 4030-4130. This can be projected upwards till at least 4200-4250 levels. But the breakout has not been confirmed by other indices (the Sensex hasn't made a clear break, nor has the BSE 500). Weak momentum signals also suggest that the move will also not be very powerful. |
| On the downside, there's support at about 4060 and this set of mixed signals suggests higher levels of volatility. |
| Counter-view: A new high is a new high whatever the background signals may be. The market has defied weak momentum signals and surged up innumerable times in the past three years. If this happens again, don't be surprised. This is certainly not a market to go short until there's a clear dip in the priceline. |
| Bulls & bears: As mentioned above, the Bank Nifty went down disproportionately while the CNX IT rose with equal strength. |
| SBI was the major reason for the Bank Nifty's downturn and Andhra Bank, Canara Bank and Bank of India were also clearly bearish. But several counters such as Bank of Baroda and J&K Bank seem bullish. |
| Among IT stocks, Polaris, Moser, Mphasis, Patni and Wipro were exceptionally strong. Satyam seems to have flattened after taking a hammering. |
| Among other industry groups, trends appear stock-specific. Bharti Airtel, Bhel, HDFC, Hindalco, Larsen, Maruti, MTNL, Nalco, Sail and Tisco seem strong. Many of these have already delivered excellent results. |
| Cipla in contrast has seen quite a lot of disinvestment. There has been a lot of interest in the Essar Oil and Essar Steel counters since delisting is rumoured to be on the cards. |
| MICRO TECHNICALS |
| Bhel Current Price: 2446 Target Price: 2520 |
| The stock has made a useful-looking upwards breakout on volume expansion. It has a minimum target of 2520 and it could go further though there is a lot of upside resistance. Keep a stop at 2425 and go long. Book some profits above 2505. |
| Cipla Current Price: 243.9 Target Price: 230 |
| The stock has seen a sell-off from the 260 levels on expanding volumes. It's likely to find some support at about 230 and if that breaks, at 215. Keep a stop at 247 and go short. Cover below 232. Go short again if it breaks 230 with a stop at 232. |
| Hindalco Current Price: 175.45 Target Price: 185 |
| The stock has seen a trend reversal jumping on high volumes after excellent Q3 results. It's likely to hit some resistance at 180 and cross that to top around 185-186. Keep a stop at 170 and go long. |
| Sail Current Price: 111.9 Target Price: NA |
| Sail has seen an almost vertical rise on strong volumes. It's impossible to calculate targets on such a formation. Set a sliding stop-loss at 105 and go long. Move up the stop loss by 5 for every 10 advance. On long-term charts, there's a target projection of 125 for what that is worth. |
| Wipro Current Price: 651 Target Price: 690 |
| The stock has almost completed a saucer formation, rising from a bottom at around 615. It has a likely target of 690, which it's almost bound to touch on an intra-day basis. Since we're in new territory here, projection of sustainable targets is difficult. Keep a stop at 645 and go long. Book profits above 685. |
| (The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.) |
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