| By weekend, indices were down to mid-December levels - three weeks of gains had been wiped off in just three sessions. After hitting an all-time high of 2120 points, the Nifty reacted down to 2015.5 for a week-on-week loss of 2.15 per cent. |
| The Sensex hit an all-time high of 6696 before reacting down to 6420 for a week-on-week loss of 1.56 per cent. |
| Breadth signals saw a little recovery by weekend as advances outnumbered declines on Friday. Volumes were very high during the sell off but they remained respectable as the indices held their ground on Friday. |
| The Nifty put-call ratio was in neutral territory at around 0.38 by Friday - it had risen from the overbought level of around 0.3. Amazingly Nifty futures were still at a small premium to spot- price suggesting that the market retains long-term optimism. |
| Outlook: Next week will probably see range-trading between Sensex 6350-6650 (Nifty 1990-2100). There appears to be fairly solid support at the bottom end of this range, where the markets turned around on Friday. |
| There is strong resistance at the top end, just below the all-time highs. The intermediate trend looks weak due to the creation of lower bottoms last week. |
| Rationale: The market reacted sharply to the news about the dollar. It has found support along the 30 DMA (daily moving average) where momentum indicators such as 14-day RSI (relative strength index) and 10-day RoC (rate of change) have both hit oversold levels. |
| It has a very powerful resistance at Sensex 6650 (Nifty 2100). The intermediate trend has been up since late October and this is the first signal of major weakness. |
| Since intermediate trends rarely last more than 12 weeks, the correction is significant in its timing. We're in a long-term bull market hence the chances favour range-trading rather than a continuous slide. |
| Counterview: It is possible that the long-term bull market will terminate in March after range-trading until the Budget is announced. The post-Budget period normally features volatility and bearishness. |
| Bulls and bears: Mid-week, there were practically no bullish shares visible but Friday displayed more positive signals. |
| Cement stocks displayed strength throughout. ACC, GACL, Grasim and Indian Cements remain good defensive options that could beat the market. |
| Telecom stocks such as Tata Tele, HFCL, Shyam Tele and VSNL responded positively to the news about ADC (access deficit charge) cuts while MTNL slid sharply. |
| Tech stocks had a selective recovery - Trigyn, HFCL, Mastek and TCS all ended on a high note. Other scattered winners on Friday included Asian Paints, Colgate, Essel Packaging, Gujarat Gas, IDBI, Indian Hotels, L&T, Max India, Pfizer, RIL, Sesa Goa and Sterlite Opticals. |
| MICRO TECHNICALS |
| L&T Current price: 972.45 Target price: 990, 1050 |
| The stock saw a sharp recovery on Friday and it's daily high-low range was greater than on Thursday when it had declined. |
| This sort of 'engulfing pattern' is supposed to be bullish according to candlestick theory. L&T could travel upto the 990 mark before it runs into some resistance. If it moves beyond 990, it would have a target of 1050. |
| ASIAN PAINTS Current price: 320 Target price: NA |
| The stock saw a strong recovery on Friday. It has defensive possibilities with strong support at 320 and a potential upside target of 350. Worth taking delivery with a stop at 300, where it has a secondary support. |
| INDIA CEMENTS Current price: 63.15 Target price: 72 |
| The stock held firm through three sessions when the market was overcome by bearishness. A glance at weekly charts shows that its clearly bullish and it has a potential target in the 72-75 range. Go long and keep a stop at 60. |
| IPCL Current price: 179.15 Target price: 185,190 |
| The impending resolution of the sibling rivalry has created a support at around 175. The stock will probably recover to around the 185 mark before running into serious resistance. |
| There is a chance that it could move back past 190. Maybe worth taking a long position with a stop at 175. |
| SHYAM TELECOM Current price: 95 Target price: NA |
| The stock has ascended vertically in the last couple of sessions and registered very high volumes through the week. When it crossed 75, it completed a very promising breakout with a target in the range of 105. |
| TCS Current Price: 1339 Target Price: 1300 |
| The stock continues to rise with support along a roughly 55 degree trendline. It maintained this trend last week. |
| However, the weekly formation showed potential weakness and there could be a pullback till the 1300 level where there is good support. On the upside, there is resistance at 1350. |
| (The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.) |
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