Intermediate trend has been up

MACRO TECHNICALS

Nifty now has a target of 3450 with a major resistance in the 3350 range.

The market displayed very encouraging behaviour this week. The Nifty gained 3.07 per cent to rise to 3274.35 points. The Sensex was up 2.99 per cent at 11192 and the Defty outperformed with 3.3 per cent as the rupee firmed up against the dollar after the Fed decided not to hike US rates.

Breadth signals were good. Advances outnumbered declines and there was a perceptible increase in volumes. The BSE 500 shot up by 4.29 per cent, while the BankNifty gained an amazing 6.32 per cent.

Outlook
The Nifty has closed above a vital zone of resistance twice in succession and it now has a target of 3450 with a major resistance in the 3350 range before it achieves that target.

The intermediate trend has now been up for 8 weeks, which is also encouraging behaviour. Reactions will find support in the 3225-3250 range.

Rationale
The Nifty had tested resistance between 3200-3250 several times earlier without breaking out. When it made the breakout last week, it happened on markedly-higher volumes. The erstwhile resistance should now act as support.

Momentum signals look reasonably bullish so, the price target should be reached. The long-term signals are also hopeful because the market indices have consistently found support at above the 200 DMA for several weeks.

Counter-view
With respect to the bull market prior to May, volumes are still low. You don't have a confirmation that the major market trend has actually switched back to bullish. The Nifty could rise to 3450 even inside a big bear market and that would be a dangerous trap for over-optimistic bulls.

Bulls & bears
Obviously bank shares outperformed since the BankNifty shot up. However there was also considerable profit-taking in big banks like ICICI, PNB and SBI on Friday and this may mean levelling off.

Among other stocks, the big movers were scattered across several industries. CMC, Infosys and Mphasis represented the tech brigade. Aventis Pharma, Bharat Forge, Biocon, Gail, GE Shipping, Hero Honda, Nicholas, NTPC, Siemens and Tata Tele all saw bullish action.

MICRO TECHNICALS

Biocon
Current Price: 344.85
Target Price: 375

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The stock has developed decent volumes and risen off a base at 325. It has a minimum target of 360 and a likely target of 375-380. Keep a stop at 330 and go long. Book partial profits at 360-plus.

Gail
Current Price: 249.7
Target Price: 260

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The stock has just completed an apparent breakout. It could achieve a target of 265 though it's more likely to top out somewhere between 255-260.

There's a fairly good support at 247. Keep a stop at 246 and go long. Book profits above 260. It Gail does close above 265, it would have a likely target of 305.

GE Shipping
Current Price: 255.1
Target Price: N.A

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The stock has jumped on huge volumes and completed a bullish formation when it closed above 250. The target could be about 285 or more. But there's resistance at just above current levels. Take delivery with a stop at 250 and a 10-session perspective. Cover above 280.

Hero Honda
Current Price: 695.95
Target Price: 730

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The stock is coming off a base at 670-675. It's hit resistance at current levels but the volume expansion has been excellent and there's a chance of achieving 730-plus. Keep a stop at 685 and go long. Cover above 725.

Mphasis BFL
Current Price:170
Target Price: N.A

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Volumes have jumped along with the stock price. The minimum target is 185. Strictly on the price formation, an upside of 205 is possible but it's very unlikely. The resistance between 185-195 is too strong. There isn't much downside. Keep a stop at 165 and go long.

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