| A sell-off during the last two sessions of the week meant that the start to 2007 was muted. The Nifty ended up by 0.43 per cent at 3983.4 points while the Sensex was up by 0.53 per cent at 13860.53 points. |
| The Defty rose 0.46 per cent as the rupee stayed firm. Breadth signals were on the negative side. Volumes picked up towards the end of the week which was when the market travelled down. Declines out numbered advances. However the BSE 500 was ahead by 0.78 per cent, the BankNifty gained 0.67 per cent and the CNXIT was up 1.28 per cent. |
| Outlook: There's a stiff resistance at about Nifty 4025-4050 which is holding up the bull "�run. Next week should see another volume expansion as the holiday spirit evaporates. |
| Momentum indicators are on the positive side. The 4000-plus resistance is likely to be tested more seriously early next week. On the downside, there's support starting at about 3970. |
| Rationale: The end of the holiday season will almost certainly mean a volume expansion. The FIIs and Indian mutuals began 2007 as net buyers. |
| The market appears to have a gentle upwards bias and that should intensify. Previous chart pattern project to values in the Nifty 4150-4200 region and that would be achieved very quickly if the Nifty closes above 4050. |
| Counter-view: There are several negative divergences on longer timeframes where momentum indicators are negative and quite a few index heavyweight stocks seem bearish. That could mean a correction. A significant correction would probably find support at about 3800-3825. The first signal would be a closing value below 3950. |
| Bulls & bears: Among index movers, the trend seems evenly balanced between bearish and bullish stocks and industry groups. |
| Energy stocks such as BPCL, HPCL, GAIL, ONGC and even Bongaigaon Refinery and IBP appear to be bullish. There are scattered long positions available in Grasim, ICICI, MTNL, GE Shipping, Moser Baer Mphasis BFL. Hind Levers and Hero Honda have seen sell offs but both stocks may be bottoming. |
| On the bearish side, Gujarat Ambuja, ITC, Mahindra, Maruti, Rcomm and Tata Motors have seen heavy selling. |
| MICRO TECHNICALS |
| BPCL Current Price: 352. Target Price: 365, 380 |
| The stock has started climbing on strong volumes. It has a clear run till the 365 level where it will hit resistance and a fair chance of moving further, until about 380, where it will hit another resistance. Keep a stop at 350 and go long. Book partial profits at 365. |
| GAIL Current Price: 275.95 Target Price: 295 |
| The stock has cleared a critical resistance and completed a bullish formation on good volumes. It has a likely target of 295 and it may travel further. Keep a stop at 270 and go long. |
| Hero Honda Current Price: 749.95 Target Price: 785 |
| The stock has seen a lot of selling and the price has eased from the 790 level. It is now sitting on a good support and the trend may be due for a turnaround. |
| There's a potential downside till about 740 and a likely upside till about 780. Go long with a stop at 745 and book profits above 780. |
| ITC Current Price: 165 Target Price: |
| The stock has seen high-volume selling which has not been absorbed by the market. It broke a key support at 170. The downside would be until 160 and if that support is broken, until 145. Keep a stop at 170 and go short. |
| Book partial profits at 160 and increase the short position if ITC closes below 160, assuming a target of 146. |
| Reliance Communication Current Price: 446.75 Target Price: 480 |
| The stock has been sold down from about the 480 level. It is likely to see support which will create a range-trading pattern with the stock oscillating between 440-480. Keep a stop at 440 and go long, booking profits at 480. If 440 is broken, go short with a target of 420. |
| (The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.) |
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