| The market continued to register gains, albeit much more uncertainly than in the previous week. The Nifty closed at 3176.75 points after hitting an intra-day high of 3234 and it gained 1.47 per cent. |
| The Sensex closed up by 1.74 per cent at 10866.51 points after briefly crossing 11K. The Defty was up 1.53 per cent as the rupee consolidated. |
| Breadth signals were neutral "� declines narrowly outnumbered advances. Volumes were uniformly low. The BSE 500 advanced 1.63 per cent, which was healthy enough. |
| Outlook The market is testing a key zone of resistance between 3175-3250. It has done enough to suggest that the intermediate trend remains positive. If it does close above 3225, it will complete a bullish formation with an upwards target of 3450. |
| Rationale The momentum indicators such as the RSI and ROC remain positive. By climbing to 3234, the Nifty has registered higher peaks, penetrating the multiple tops of early July at the 3200 level. |
| That means the intermediate trend is still, by definition, up. If the Nifty closes above 3225, it will complete a breakout from a saucer. |
| The major negative signal is low volumes. There's been so much trading in this zone, in February-March, it's difficult to conceive a successful breakout without drastic volume expansions. |
| However, every week of net gains leads to more optimism and an important bullish signal is that the market has managed to stay above the 200 DMA. |
| Counter-view Despite an uptrend which has lasted 6-weeks so far, the long-term signals still suggest this could be a "dead-cat bounce" in a big bear market. |
| The worry is that the uptrend could have the steam to move up until 3450 and then peter out, without a change in the overall bearish perspective. In that case, there would be a lot of trapped bulls. |
| Bulls & Bears When one examines specific stocks, very few appear to be independently bullish "� this is one of those phases where most stocks will move in a herd. |
| However, Bharti Airtel, Dabur, HDFC, Ranbaxy and Nicholas could pull the market up next week. TCS is also looking fairly good. On the flipside, most bank stocks seem poised for a sell-off and SBI, PNB and Syndicate definitely experienced selling pressure on Friday. Cipla could also see some selling. |
| MICRO TECHNICALS |
| BHARTI AIRTEL Current Price: 400.7 Target Price: 425 |
| The stock has completed a breakout, which could pull it to the 425 level. There's been some volume expansion with the breakout but there's also huge resistance at the current zone. The best option would be to take delivery and accumulate with a 10-session perspective. Keep a stop at 390. |
| DABUR Current Price: 135.5 Target Price: N.A. |
| Dabur appears to have consolidated near a recent bottom and it could be ready to start the next climb. It will hit resistance at 140 but there's scope for a rise to the 150 level. Keep a stop at 130 and go long. |
| NICHOLAS Current Price: 217.5 Target Price: 235 |
| The stock crossed an important resistance at 214. It has also seen some volume expansion. The minimum upside would be about 230 and there's a good chance that it will get to at least 235. Keep a stop at 214 and go short. |
| SBI Current Price: 807.8 Target Price: 780 |
| The stock has reacted sharply from the 840 zone and it could drop till 775-780 before stabilising. Keep a stop at 820 and go short. Partially cover around 790. If it drops below 775, SBI could dip till 740. |
| TCS Current Price: 948.55 Target Price: 1010 |
| If the stock can cross resistance at 955 and close above that level, it will complete a bullish formation with a target of about 1010. It's worth taking delivery with a 10-session perspective. Keep a stop at 940. |
| (The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.) |
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