Upsurge May Continue

 The market completed a short, sharp correction and then surged again after the settlement day. The Nifty ended at 1555.9 points with a week-on-week rise of 3.31 per cent.

 The Sensex was up by 3.14 per cent at 4906.87 points. The Defty rose 3.41 per cent as the rupee resumed its climb.

 Breadth was reasonable. Volumes rose sharply towards the latter part of the week alongside rising prices. Advances outnumbered Declines comfortably.

 The broad BSE 500 Index rose by 3.3 per cent. The Nifty put-call ratio again dipped into the overbought zone of 0.25 as long positions were rolled over into November.

 Outlook: The market should continue rising next week although a continuation of the uptrend cannot be absolutely confirmed until the previous tops of Sensex 4951/Nifty 1575 are exceeded.

 The bounces on Thursday and Friday were backed by excellent volumes and positive signals from a basket of leading and lagging indicators including the RSI, the ROC and the 10-DMA, which has usually given reliable signals since April 2003.

 Rationale: The monthly F&O settlement caused exaggerated selling pressure. The Nifty's reaction came close to the first Fibonacci retracement/support level of 1425 although the Sensex stayed well above the equivalent level of 4480.

 Since the reaction has led to most indicators moving down into oversold zones and then turning around and offering buy signals, the market probably fell enough to re-energise the bulls.

 Counter-view: It is possible that the market could remain inside a trading range of roughly Sensex 4600-4950/Nifty 1435-1575. Or even that it could drop further.

 The renewal of the uptrend would only be completely confirmed when the previous peaks of 4950/1575 are exceeded and there will certainly be resistance at that zone. Cautious traders could stay out until action at that level resolves one way or the other.

 However, the background indicators strongly suggest that the market will beat those tops quite soon and our minimum expectations would be an upmove till the 4951/1575 levels.

 Bulls and bears: The bullishness was well-distributed across sectors. PSU stocks looked among the more promising segments with BPCL, Bhel, BEL, Gail and Concor contributing to the rise.

 Cement/construction stocks like Grasim, Gujarat Ambuja and Jaiprakash also saw enthusiastic buying.

 Both GE Shipping and SCI had their supporters. Banks like ICICI, Bank of Baroda and PNB were bullish. Bajaj Auto, M&M and Hero Honda also spurted.

 In the power sector, BSES, Tata Power and Siemens saw investment-based spikes. Among technology stocks, Digital, HCL Technologies, NIIT, Bharti Tele, Moser Baer and Mphasis BFL were bullish.

 Cipla, Sun Pharma and Dr Reddy's represented the pharma sector. Investment buying in Tisco, Bharat Forge, Hindalco and Sterlite suggested continuing interest in metals. IPCL, Tata Chem and Bausch & Lomb also saw support.

 MICRO TECHNICALS

 CONCOR

 Current price: 490

 Target price: 540  The stock seems to be bouncing after a recent sharp correction. It has seen a sharp spike moving up from the 390-level in just three sessions without, however, developing strong volumes. That's a danger signal.

 Although the projected target on pure price-pattern would be in the 565 range, the low volumes suggest that it will not cross resistance at the previous peaks in the 540-550 range.

 There is also resistance starting at the current levels and going all the way to 502. Either take a long position with a stop at 478 or, wait until Concor has closed above 502 to take a position.

 GE SHIPPING

 Current price: 95.8

 Target price: NA  The stock has made a sharp breakout from a recent trading range. It has seen enhanced trading volumes during the move. In the last three months, it has hit successive 10-year highs.

 Unfortunately, it isn't possible to project a reliable target from this formation nor is it possible to guess at a possible timeframe for returns.

 However, there is good support at around 88. Our suggestion would be to take delivery, set a stop at 88 and hold for upto three-four months.

 HERO HONDA

 Current price: 353

 Target price: 380  The stock jumped past severe resistance at the 340-levels to complete a bullish saucer formation. It has consistently generated high volumes in the last three-four sessions while finishing the breakout. The target on this move would be somewhere in the 380-385 zone.

 It is however, difficult to set a reasonable stop-loss since the stock has developed a large intra-day range. The safe stop would be at 327 - anything higher may be triggered by a minor twitch.

 Traders might compromise with a stop at 340 with the provision to buy again if the stock rises past 350.

 TATA POWER

 Current price: 235.75

 Target price: 245  The stock has just completed a small breakout that has a short-term target of 245. This move has been backed by decent volumes and good momentum indicators. It has reliable support at around 225.

 The long-term target of the stock (attainable over four months) would be in the range of 310. It's worth going long, with a stop at 225 and the intention to book partial profits at 245. That way, it would be possible to create a long-term position at a lower average cost of acquisition.

 TATA CHEM

 Current price: 125

 Target price: 133  The stock has completed a bullish formation on high volumes with a strong breakout. It has an upside target of at least 133 and possibly 140.

 It also has reliable support around 121. Set a stop at 120 and go long. Start booking partial profits above 132.

 (The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.)