Expect resistance

MACRO TECHNICALS

The new settlement has started cheerfully. The Sensex closed on Friday at 8853.21 points for a gain of 1.92 per cent. The Nifty rose 1.69 per cent to close at 2668.15. The Defty was up 1.66 per cent in a week when the rupee stayed almost stable.

Breadth was fair in that advances comfortably outnumbered declines. Volumes were average if the inevitable surge on settlement day is discounted. The broad BSE 500 was up 1.59 per cent.

Outlook: The market is very close to its all-time record levels of early October "� the Sensex has already pulled to a new high and the Nifty is just below its all-time top. One good session would take it into a new zone.

However, the technical signals are not wonderful. My guess is that the Nifty will hit new highs this week but be incapable of sustaining prices above the 2665 level. Hence we'll see a correction back to those levels.

Rationale: There is a strong resistance between Nifty 2650-2675 and the market has tested this in the past 2 sessions. Current momentum indicators are not very bullish.

While there may be enough momentum to take prices to a new high, there won't be enough volume to mop up all the selling and sustain these prices. We are seeing a narrowing effect where the 30-scrip Sensex performed better than the 50-scrip Nifty, which in turn beat the BSE 500.

A bullish signal would be a close above Nifty 2670. That would imply a fresh leg for the long-term bull-market. There are some negative implications if the market does not hit even an intra-day high above 2670. In that case, we would have a double-top which has bearish implications.

Counter-view: The two-session recovery and the new settlement may pull more traders and institutions into the market. If that happens, it's possible that the market will surge to a new high without any problems. Naturally that would be bullish.

Bulls & bears: PSUs and banks provided much of the impetus this week though the uptrend was fairly well-distributed. Among PSUs, BPCL, Bhel, Bharat Electronics, ConCor and Chennai Petro looked strong. Among banks, Corporation Bank, Union Bank and UTI Bank could produce better short-term returns than their bigger compatriots.

Among other stocks, cement shares like ACC, Gujarat Ambuja and Grasim continued to maintain a bullish profile.

Engineering majors ABB and Siemens saw a lot of buying. Auto stocks like Maruti, M&M, Tata Motors and TVS Motors were also bullish. There was also buying scattered across other stocks such as Bharti Tele, HDFC, Hindustan Levers, ITC, Mphasis BFL, Ranbaxy and Satyam.

MICRO TECHNICALS

Bharti Tele Ventures
Current price: 363.9
Target price: 372

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The stock appears to have made a breakout on reduced volumes. The nominal target would be 372 but the low volumes make it likely that it will not be able to sustain this price though it may hit it on intra-day basis. Keep a stop at 360 and go long. Book profits above 370.

HDFC
Current price: 1116
Target price: 1185

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The stock has made quite a strong breakout on high volumes. It has a target in the range of 1185 and it may move further given the level of trading. There is support at 1085. Keep a stop there and go long.

Corporation Bank
Current price: 368.3
Target price: 385

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The stock completed a bullish formation when it closed above 364 in a high-volume session. It could have a minimum target of 385 and a possible long-term target that is around 405. Keep a stop at 363 and go long. Book partial profits at 385.

Hindustan Lever
Current price: 186.7
Target price: 198

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HLL has just moved into a new zone after experiencing strong buying in the past 2-3 sessions. It has a support at 184-86 and a possible target of 198-200. Keep a stop at 184 and go long.

Siemens
Current price: 2939
Target price: 3000

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A massive breakout may suggest altered potential for the stock. It has a probable target of 2990-3000 but it could go a lot further given the sudden chance in price-volume movements.

Siemens is a relatively illiquid share so serious buying can create a disproportionate effect. Keep a stop at 2900 and go long.

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