| The market went through a small correction as the FIIs sold through the last three sessions of the week. |
| The Nifty ended down by 0,52 per cent at a close of 3569.7 points. The Sensex was down by 0.65 per cent at 12372.81. The Defty gained 0.35 per cent however as the rupee strengthened considerably through the week. |
| Breadth signals were poor with two noticeably low-volume sessions and declines outnumbering advances. The BSE 500 was however, up 0.4 per cent suggesting that the midcaps retained some strength. The Banknifty continued to outperform the market gaining 0.66 per cent. |
| Outlook: The chances are, the correction will continue. The Nifty has not been able to climb past resistance at 3600. If support at 3510 is broken, the next reliable support is at 3465. There is a good chance that we're into the first stage of an intermediate downtrend, so the market could fall quite a bit lower. |
| Rationale: The intermediate uptrend that started in mid-June has lasted 15 weeks which is well past the normal "sell-by-date". We're heading into the Diwali period when the market is usually weak. |
| Momentum indicators such as the ROC are weak and so are breadth signals. The downside target would be somewhere between 3300-3350.and the downtrend could last several weeks. |
| Counter-view: Through the bull-run of 2004-06, the market has displayed a pattern of long uptrends interspersed by short corrections. |
| There is a chance that we will see a period of range-trading between 3500-3600 followed by another uptrend. And, if there is another surge and the Nifty clear resistance between 3600-3650, it could challenge the all time highs. |
| Bulls & Bears: The market was buoyed up by speculative bounces in refinery and petro-chem stocks as crude prices eased. BPCL, HPCL, IPCL and IBP all saw sharp rises. |
| The bank sector did its bit with Bank of Baroda, Bank of India, Union Bank, UTI Bank and PNB all doing well. The CNX IT fell but Infosys, Polaris and BFL all rose against the tide. There were scattered gains in M&M, MTNL, VSNL, Ashok Leyland, Moser and Siemens. Among index heavyweights, ITC, TCS and Maruti all looked weak. |
| MICRO TECHNICALS |
| BPCL Current Price: 394.35 Target Price: 425 |
| The stock has just completed a bullish formation on high volumes. It has a likely target of 425. There's a large downside risk with the first reliable support at 375. Keep a stop at 375 and go long. Book partial profits at above 410. |
| Moser Baer Current Price: 239.35 Target Price: 270 |
| The stock saw a huge jump in both price and volumes. It completed a breakout at about 238 and it has a likely upside target of about 270. Keep a stop at 230 and go long. Weekly charts suggest a long-term target of about 295 so it may be worth accumulating a delivery position with a timeframe of 4-6 weeks. . |
| Maruti Current Price: 943 Target Price: 915 |
| The stock is finally reacting after a sustained bullrun from 690 levels to a top at 990. It's likely to find support at 915. Keep a stop at 950 and go short intending to close the position at 915. If it breaks below 900, MUL will probably bottom out at 875. So be prepared to go short again if it does drop below 900. |
| Polaris Software Current Price: 130 Target Price: 149 |
| The stock completed a breakout at 122 and it has an upside target of 149. But there is a strong resistance at 134 and volumes were low onthe breakout. |
| It may find it difficult to cross 134 immediately, unless there's a volume expansion. May be worth taking a delivery position with a stop at 126 because the long-term pattern looks very promising. |
| UTI Bank Current Price: 394 Target Price: 415 |
| The stock has continued to rise steadily since early June when it was at around 240. It has a short-term target of about 415 and a very promising long-term formation, which is not however amenable to target projections. Keep a stop at 385 and go long. Consider keeping delivery. |
| (The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.) |
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