Expect a correction

MACRO TECHNICALS

The market could see a correction due to profit-booking but there is strong support at Nifty 3125.

The market obviously liked the Budget. The Sensex moved up 3.87 per cent post-Budget to close out the week at 10595.43 after hitting a high of 10706. The Nifty was up 3.19 per cent at 3147.35 points after hitting a high of 3170. The Defty was up 3.36 per cent.

Breadth signals improved quite sharply after the Budget was announced. There was a large volume expansion and the ratio of advances to declines also went positive (though it turned negative on Friday). The BSE500 rose 3.66 per cent.

Outlook: We could be in for a short period of either consolidation or correction given the trend of profit-taking on Friday. The market has a fair degree of support at Nifty 3125 (Sensex 10550) so this should not be a major correction.

Rationale: An upwards breakout is usually followed by either a consolidation or profit-taking and the pricelines turned negative on Friday. The likeliest outcome is a few sessions of range-trading between Nifty 3130-3175. In the event of serious profit-taking, there's support at about 3080.

Counter-view: The overall trend appears to be very positive and the budget has given fresh momentum to the bull run. A close above 3170 would be required to let the bull run continue. It's quite possible that an intra-day correction or consolidation would be followed by strong buying that broke the 3170 resistance.

Bulls & Bears: The impetus for the run has come mainly from two sectors though the mood was up almost across the board. One is power and power equipment manufacturers.

Stocks like ABB, Bhel, Siemens, Suzlon, Tata Power and Reliance Energy have all seen large jumps in their price lines. The other sector, which has driven the market is small car makers "� there are just two listed stocks here in Maruti and Tata Motors.

Apart from these, there were isolated upwards movements in Bharti TeleVentures Tisco, Bharat Forge.Nicholas Piramal , Sterlite and UTI Bank.

Downtrends were visible across IT and in many bank stocks. L&T was a surprise loser. PSU oil stocks lost ground and found some support at lower levels.

MICRO TECHNICALS

Suzlon
Current Price: 1178
Target Price: 1240

---

The stock has just completed a bullish saucer formation on reasonable volumes. It has a minimum target projection of about 1240 and it could rise further. Keep a stop at 1150 and go long.

Maruti Udyog
Current Price: 931
Target Price: NA

---

A huge volume expansion has driven a 150-point jump. One danger is that a correction could be quite deep and also, this price line isn't conducive to target projection. Keep a sliding stop at 915 and go long.

Bharti Tele
Current Price: 408
Target Price: 430

---

The stock has gained about 60 in the past three sessions and done so on expanding volumes. It has a likely price target till the 430 level. Keep a stop at 395 and go long. Book partial profits above 430. May be worth accumulating a position for the long-term.

Bharat Forge
Current Price: 436
Target Price: 465

---

The stock seems to have a firm support at about 430 and a likely upside till around 465 with some resistance at 437. Keep a stop at 430 and go long. A close above 437 would be the first sign of a renewed bull run. May take between 5-10 sessions to start running.

Tata Power
Current Price: 547
Target Price: 565

---

The stock has seen generally high volumes along with a steady price rise. It has a minimun target projection of 565 and it could easily move a lot further. Keep a stop at 535 and go long.

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