| The derivatives settlement went through smoothly with the Nifty moving to new highs and closing at 4297 points for a gain of 1.15 per cent. The Sensex was up 1.62 per cent at 14570 points. The Defty gained 1.65 per cent as the rupee continued to strengthen. |
| Breadth was good with advances outnumbering declines although there was a sell-off in the last session. The BSE 500 was up 1.73 per cent while the Bank Nifty gained a disproportionate 3.29 per cent and the CNX IT dipped by 0.7 per cent. |
| Outlook: Despite the new highs, the market hasn't definitively broken out. It could range-trade this week between 4225-4325 points. Closes outside this range would be meaningful in terms of establishing a new trend. An upwards breakout is somewhat more likely. |
| Rationale: By definition, the intermediate trend is up. Momentum indicators are neutral but a short-term range of 4225-4325 has been clearly established. A close outside this range preferably on a volume expansion is likely to establish new short-term targets. |
| Both FIIs and mutual funds remained strongly net buyers. The high levels of liquidity in the money market also means that more money could flow into stocks. On the upside, a close above 4325 could mean a new target of 4400. |
| Counter-view: Settlement considerations ensured that the market stayed buoyant. There was a sell-off on Friday once the settlement was through. That could translate into weakness in the early part of the week. There could be a downside till 4125 if the market closes below 4225. |
| Bulls & Bears: Apart from the settlement effect, the bank sector was the main driver of price gains. SBI and ICICI Bank both did well but HDFC Bank looked most promising. |
| Apart from that, action was scattered. While Deccan Aviation responded strongly initially to the news of the Mallya stake, there was a subsequent bout of profit-taking. |
| Oddly Jet Airways looked stronger by weekend. There was a certain amount of action in PSUs such as MTNL, Gail and Bharat Electronics. Bhel's stock-split should induce another surge in the price. |
| Other engineering firms like ABB and L&T also looked strong. There was a lot of action in real estate stocks such as Indiabulls Real Estate and Peninsula Land. |
| With the induction of the Nifty Junior into the futures and options segment, action could hot up in some of its constituents. |
| MICRO TECHNICALS |
| ABB Current Price: 4698.35 Target Price: 4750 |
| The stock has maintained a rise on a trendline 45 degree slope since early April when it was trading around 3400. It's difficult to make short-term target projections on this pattern but it is very bullish. |
| Volumes improved last week as the stock rose to a new high. Keep a stop at 4635 and go long. Book some profits around 4750. |
| Bharat Electronics Current Price: 1890 Target Price: 1930 |
| The stock has made a breakout on expanded volumes. It has a minimum target of 1930 and it could move quite a bit further given an excellent long-term pattern. Go long, keep a stop at 1855 and book partial profits at above 1930. |
| HDFC Bank Current Price: 1153.45 Target Price: 1225 |
| The stock is slowly overcoming a resistance at around the current price. It has a short-term term in the range of 1225 if it closes above 1160. Keep a stop at 1145 and go long. |
| The weekly charts suggest that the long-term trend has changed for the better because there has been a breakout in the last week. |
| Indiabulls Real Estate Current Price: 402 Target Price: 430 |
| The stock has completed a "mini-breakout" on strong volumes in the last two sessions. It has a likely target of 430. The formation is a little like an inverted head and shoulders with a flat bottom. Keep a stop at 395 and go long. |
| Larsen & Toubro Current Price: 1999.95 Target Price: 2125 |
| There was a big jump in prices, backed by institutional buying. The stock was slightly overextended by weekend and starting to consolidate. Nevertheless it has a likely target of 2125. There's support at 1960-1980. Keep a stop at 1960 and go long. |
| (The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.) |
Top Section
Explore Business Standard