| Breadth was reasonable but there were some warning signals pertaining to the immediate future. Advances outnumbered declines by a comfortable margin. |
| The BSE 500 was up by 2.49 per cent. But the Nifty put-call ratio was down to 0.29 and that is in overbought territory. And, volumes dipped through the week - another red flag in a market that's moving up. |
| Outlook: The likelihood is that the market will continue to trade inside the current range, perhaps testing support between Nifty 1775-1790/Sensex 5675-5700 on the downside. |
| Or, it may see some gains next week. The outlook over the next three weeks at least should remain positive. The target for this specific move should be around Nifty 1900/Sensex 5950. |
| Rationale: This current move shows signs of being the first upswing in a new bull-market. The first wave in a new bull market tends to be very strong and is also sustained for longer than usual. The first wave is often strong enough to ride out a few volume dips and overbought signals. |
| Despite the weak volumes, the overbought PC ratio and resistance above the current levels, most momentum indicators remain positive. The market has moved up steadily since late August - it could rise for several more weeks if this is indeed a 'first wave'. We will only have a confirmation of a new bull market as and when, the indices rise above the highs of January 2004. |
| Counter-view: The weaknesses mentioned above could lead to a short-term selloff. If the market does drop below support at Nifty 1775/Sensex 5675, the upmove that started in late August might actually terminate. This doesn't seem likely however. |
| Bulls and bears: Most stocks are now being driven by Q2 results and expectations thereof. The bullish stocks include Ashok Leyland, BPL, Global Tele, GE Shipping, HCL Technologies, HDFC, IPCL, Madras Cement, Rolta, Shipping Corporation, Sonata Software, SAIL, Tata Chemicals, Tisco, Titan, TCS and UTI Bank. There is obviously a bias towards the IT sector where decent numbers are expected. |
| MICRO TECHNICALS |
| TITAN INDUSTRIES Current price: 160 Target price: 170, 300 |
| The stock has spurted up on heavy volume expansion. It is very close to an all-time high. If it overcomes resistance at around 170, it would have a long-term target of around 300 but we would expect that to be achieved only over a period of around three-four months. Keep a stop at 150 and take delivery. |
| ASHOK LEYLAND Current price: 20.5 Target Price: 21.5, 25 |
| The stock has seen huge volume expansion in the past week along with a spurt in prices. It has a strong resistance at 21.5 but it should go past that on the evidence of this volume expansion. |
| If it closes above 21.5, the stock will complete a bullish formation, giving it a target of around 25. Keep a stop at 19.5. Warning: All projections are a little 'fuzzier' because of the comparatively recent 10:1 stock split. |
| GE SHIPPING Current price: 181 Target Price: 220 |
| The stock completed a bullish formation when it closed above 175. It should now have a minimum target of about 220 on the basis of the weekly charts, where it has performed an inverted head & shoulder pattern, which projects to this target. |
| On daily charts, making projections isn't easy - the stock has moved up too sharply. This might result in a short-term pullback to 175 levels. Keep a stop at about 172. |
| HDFC Current price: 681 Target Price: 725, 800 |
| The stock is very close to an all-time high, If it closes just above the current levels, say around 685, it will complete a promising long-term formation. The target would then be in the range of 800 to be achieved over a period of about three months. A trader may expect a target of 725 in the next 10 trading sessions. Keep a stop at 670. |
| TISCO Current price: 302 Target price: 305, 420 |
| Tisco is moving up on fair volumes but it's likely to run into severe resistance around the 305 level. If it closes above 305, the stock would have a long-term target in the range of 420. It's prudent to wait for a close above 305 before taking long positions with a stop below 305. |
| UTI BANK Current price: 157 Target price: 195 |
| The stock has moved up with reasonably good volume support, with more trading interest on the NSE than the BSE. It ought to have a target of about 195. But there is a fair degree of risk because the stock has moved up too fast to have reliable support close to current prices. Keep a stop at 145, anything higher could be triggered by an intra-day twitch. |
| (The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.) |
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