Settlement week went through with net gains and the Nifty closed up 3.09 per cent at 5111.7 points. The Sensex was up 3.91 per cent at 17,125 points. The Defty was ahead by 2.52 per cent as the rupee weakened to over 40. On the basis of provisional Friday numbers, DIIs were marginally net positive while FIIs were net buyers for the week.
Volumes were disappointingly low for settlement week. However breadth was good, advances comfortably outnumbered declines and except for IT, most sectors went up. The Junior went up 4.55 per cent while the Midcaps 50 rose by 3.47 per cent. The BSE500 went up by 3.65 per cent.
Outlook: The chart pattern suggests that there was a strong breakout last week with a target in the 5200-range. There is good support at the 5000 level. However, there is also strong resistance above 5100. The market is most likely to consolidate in a trading range between 5000-5200 this week.
Rationale: The intermediate trend has been positive for 5 weeks and the Nifty has managed to close above its own 200 DMA average for the first time since early March. However, there was no volume expansion on the breakout and it's unlikely to generate enough momentum to beat resistance at 5200.
Counter-view: This would still be classified as an intermediate correction (second wave) inside a long-term bear market. That being said, the chance of the move fizzling out is quite high. The first sign that the intermediate trend is reversing again would be closes below the 5000 support level
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Bulls & bears: As mentioned above, most sectors did well except for IT where most of the biggies have declared results and guidance. Disappointment with TCS set off a sector-wide sell off though Wipro held its ground.
Banks saw a jump in valuations with the BankNifty up by 6.3 per cent despite several majors declaring substantial provisioning for overseas credit derivatives exposures and these include Axis, HDFC Bank, ICICI and PNB. Telecom service providers also saw lots of action with Bharti, RComm and Idea all swinging up.
Apart from this, investment was scattered across the universe with a focus on results. BPCL Chambal Fertilisers, Everest Kanto, HDFC, Hero Honda, Nicholas, RNRL, Reliance Capital, Sun Pharma, Tata Steel and Welspun Guj would be among the most interesting. Profit booking is evident in Orchid Chemicals and Sasken has also seen a lot of selling.
MICRO TECHNICALS
Bharti Airtel
Current Price: Rs 922
Target price: Rs 960
The stock surged with a massive volume expansion on Friday. It has the potential to test resistance at the 960 mark at least on an intra-day basis. Keep a stop at 910 and go long. Be prepared for another very big session in terms of high volumes and large high-low ranges.
Everest Kanto
Current Price: Rs 336.4
Target price: Rs 360
The stock has seen a freakish trading pattern. It's been opening high and closing with net gains despite intra-day profit-booking. Volumes have multiplied. It completed a breakout on Friday when it crossed 335 and closed above that mark. Keep a stop at 330 and go long with a target of 360.
PNB
Current Price: Rs 556.7
Target price: Rs 530
The stock has climbed steadily from 480 levels. It's hitting resistance at 560. If it closes above 560, the target would be in the region of 590-600. More likely, it will see profit-booking and swing down till the 530 mark. Use 560 as a pivot. Keep a stop at 560 and go short. Book partial profits at 540. If 560 is broken, go long with a minimum target of 575.
RNRL
Current Price: Rs 124
Target price: Rs 132
A downtrend that started in mid-January appears to have finally reversed. The stock has the potential to rise till around 132 before it hits another strong resistance and it may achieve 135 on an intra-day high. Keep a stop at 118 and go long.
Welspun Gujarat
Current Price: Rs 451.1
Target price: Rs 485
There's been a volume expansion and net price gains. Friday saw a bullish price