| Breadth signals were negative. Declines outnumbered advances by more than 2:1 by Friday. The Nifty put-call ratio rose to 0.61 which is definitely in the oversold range. Volumes were low through all five sessions. The BSE 500 was down 0.3 per cent on a week-on-week basis. |
| Outlook: This week should continue to see range-trading with an upward bias. The market has failed to pierce the Nifty 1650 (Sensex 5265) barrier with any conviction. Right now indices are trading at the lower end of a range between Nifty 1575 and 1630 (Sensex 5050 and 5175) and the market is looking somewhat oversold. Indices could travel back towards the top of the range but there will be strong resistance at Nifty 1630. |
| Rationale: The low-volume range-trading pattern can last indefinitely. The market appears marginally oversold but technical pressures may not be enough to force prices up out of the range. |
| Without a significant volume expansion, the market may not have enough demand to force prices up out this range. At the same time, Nifty 1575 (Sensex 5050) appears to be a very strong support and in the absence of an external trigger, price won't fall below that level. |
| Counter-view: There has now been a pattern of net declines interspersed with occasional intra-day pullbacks for the last eight sessions. |
| If this bearish trend intensifies slightly, the Nifty 1575 (Sensex 5050) level could be broken and the market might then plunge. Unexpected bad new could cause a sharp decline given the lack of current volumes. |
| Bulls and bears: Most stocks mirrored the market by moving inside their respective ranges but there were a few bullish plays apparent. South Indian cement companies such as Madras Cement and India Cement did well as did Grasim. |
| So did a motley crew of stocks such as Chennai Petroleum, CMC, Essel Packaging, Hindalco, Sesa Goa, Syngenta Industries, Thermax, Thomas Cook, Voltas, Wipro and Zee Telefilms. There are few industry/sector patterns visible in the above list. |
| MICRO TECHNICALS |
| THERMAX Current price: 423 Target price: 470 |
| The stock has lifted above a critical resistance and completed a bullish formation in the last two sessions. It has also seen a volume expansion. Over the past four months, it has completed a saucer formation with a flat bottom at about 380. |
| The target for this move would now be in the region of 470. There is very little resistance above the current levels; so this may be achieved surprisingly quickly despite lacklustre market conditions. Go long and keep a stop at 410. |
| CHENNAI PETROLEUM Current price: 142 Target price: 145, 153 |
| The stock has moved up on strong volumes in the past three sessions. It has two key resistances - the first at 145, the second at 153. There appears to be sufficient demand to break the first resistance. |
| If the stock closes above 145, it will test the 153 level. If it closes above 153, it will have a target in the zone of 180. Either wait for a close above 145 or go long and keep a stop at 135. |
| ESSEL PACKAGING Current price: 193 Target Price: 205 |
| The stock spurted on Friday with a coincident expansion of volume. It has strong resistance in the zone of 197-205. As such, it seems likely to settle into a trading range between those two levels. If it moves past 205, it will complete a very bullish formation and there would then be a target of around 225. |
| THOMAS COOK Current price: 466 Target price: 480,520 |
| The stock saw a strong upmove on Friday and this was backed by decent volumes. It seems to have completed a bullish saucer formation over the last 14 weeks. |
| The upside target ought to be in the range of 520 with resistance at 475-480, which will slow down the move. Go long, keep a stop at 450 and be prepared to book some profits around 480. |
| VOLTAS Current price: 134 Target price: 165 |
| A very strong move was apparent in the last couple of sessions. Prices jumped and volumes multiplied. The stock seems to have completed a bullish formation. |
| The target would be around 165 but there will be selling pressure between 145-150. There is support at 125. Go long, keep a stop at 125 and expect some resistance at about the 145 mark. |
| ZEE TELEFILMS Current price: 146 Target price: 155 |
| The stock has seen an upmove in the past few sessions but this seems to have run into resistance on Friday. Volumes also declined on Friday, which suggests the trend is running into trouble. |
| However, the chart formation suggests that a bullish inverted head and shoulder formation has just been completed. There ought to be a target of about 155. |
| However, the lack of volumes should lead to caution on the part of the trader. The neckline is very close to the current price. If you go long, keep a tight stop at 142. |
| (The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.) |
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