| Prices remained range bound through last week though intra-day volatility appears to be on the rise. The Sensex closed at 11572 with a week-on-week gain of 0.93 per cent. |
| The Nifty rose by 0.87 per cent to close at 3385. The Defty rose by 0.65 per cent as the rupee lost a little ground. The BankNifty was an outperformer with a rise of 2.88 per cent. |
| Breadth remained reasonably good. Volumes were stable and advances outnumbered declines. The broad BSE500 gained 1 per cent. The FIIs remained net positive while the mutuals were net sellers. |
| Outlook: The Nifty remains range-bound inside 3310-3405. It has a mild upwards bias if we take Friday's prices as indicative. There is room for a target of 3450 to be achieved by settlement. |
| On the downside, there is support between 3275-3315 and any reaction should end here. Expect intra-day high low ranges to rise to around 70-80 points in the next few sessions. |
| Rationale: There will need to be a major trigger for sentiment to create a breakout from the 3250-3450 range. There is a massive resistance at 3450-plus and strong support between 3250-3315. |
| Most momentum tools give misleading signals during range-trading periods so, it's difficult to call a breakout. I doubt that any breakout will occur pre-settlement. |
| As of now, the Nifty PCR ratio is well over unity, which means that the market is somewhat oversold on this basis. A short-term rise is more likely than a drop. |
| Counter-view: The market has made net gains since mid-June. There are two ways to interpret this. One is that it's late into an intermediate uptrend, since this is week 10. |
| Hence, a downturn is more likely since the trend is likely to reverse soon. However, intermediate trends can last three months and there is often a final hectic surge in the last fortnight of an intermediate trend. |
| Bulls & bears: As mentioned above, bank shares outperformed. PNB, SBI, and UTI Bank led the charge for the sector. |
| Among other stocks, Gail and Hindalco looked strongly bullish as did Zee Telefilms. Sterlite, RIL and Essar Oil also looked interesting from the bull-perspective. BPCL and HPCL suffered from high-volume sell-offs. Tata Tea and Hero Honda saw big volume expansions without much price movement. |
| MICRO TECHNICALS |
| Essar Oil Current price: 52.20 Target price: 63.00 |
| The stock has seen a sharp rise on volume expansion. It could have a target of around 63. However there was a major contraction in the futures open interest even as volumes expanded on Friday. |
| This may mean the stock will lose momentum. At any rate, given the high-volume breakout, go long with a stop at 48. |
| Gail Current price: 274.55 Target price: 285, 300 |
| The stock has moved up sharply on a marginal volume expansion. It seems to have just completed a breakout at 268, which sets a minimum upside target of about 285. There is room for a move till the 300 level if volumes expand. Keep a stop at 267 and go long. |
| Hindalco Current price: 172.65 Target price: 185, 195 |
| The stock is generating decent volumes and it has started moving up from a base at 160. Keep a stop at 170 and go long. The likely target is 185 and there is a potential maximum upside till about 195. Book partial profits above 185. |
| Hero Honda Current price: 714.20 Target price: 765 |
| The stock has seen strong volume expansion without much price movement. This could be driven by bulk order but it could also herald a future jump on price. |
| The formation is potentially bullish a close above 720 would likely mean a move till at least the 765 mark. Keep a stop at 705 and take delivery with a 10-session perspective. |
| UTI Bank Current price: 343 Target price: 365 |
| The stock has seen a consolidation followed by steady gains. There is a potential upside till 365 where it will run into strong resistance. It may be worth accumulation for delivery with a 10-20 session perspective however. If it closes above 365, UTI Bank will have a likely target of 450-plus. |
| (The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.) |
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