Resistance at 5,000, support at 4,800.
The Budget was well-received but the initial enthusiasm was dampened by selling in the latter part of the session. The Nifty hit a high of 4,992 points before falling back to close at 4,922 for a week- on-week gain of 1.6 per cent. The Sensex was up 1.47 per cent at 16,429 points. The Defty gained 2.1 per cent as the rupee continued to harden.
Breadth was fairly good though smaller stocks underperformed the pivotals. The BSE 500 was up 0.9 per cent and the Midcaps actually lost around 0.8 per cent. Volumes were strong on Thursday and Friday - not surprising given that settlement was followed immediately by the Budget. Domestic institutions were net sellers for the second week in succession while FIIs bought in moderate quantities.
Outlook: Market direction is still not very clear. The resistance at 5,000 was not conquered. However, the intermediate trend seems to have changed for the better. There have been successive higher peaks and support along a positive-looking trendline. The short-term trend could well be negative early next week if the sentiment of the last hour on Friday doesn't alter over the extended weekend.
Rationale: The market could open with a large gap in either direction on Tuesday since the fine print of the Budget will have been absorbed by then. The Nifty's trendline has looked positive since the last low of 4,675 on February 8. Higher peaks have been established at 4,951 (February 2) and 4,882 (February 26) - the second high came due to the Budget. On the upside, a break and close above 5,000 would be positive. On the downside, support above 4,800 should hold.
Counter-view: There are distinct chances of a negative swing early next week, given weak short-term signals on Friday, an apparently negative reaction to the Budget from domestic institutions and weakness overseas. The latter factor is imponderable but traders will get a clearer picture from overseas markets on Holi. If things get worse, the Nifty could take a bath on Tuesday. In that case, the benchmark support for the intermediate trend would be 4,675.
Bulls & bears: IT was the only industry to see major sell-offs on Friday though the CNXIT was up 0.9 per cent on the week. ITC also lost serious ground. Real estate stocks got a mixed reaction with several majors such as Unitech and DLF gaining while Indiabulls Real Estate lost a lot of ground. Energy stocks also saw mixed responses with OMCs and refiners losing ground while ONGC and Cairns gained.
Most other industries saw positive gains across the board though these were pared late in the day. Listed auto majors all registered major gains. Finance was another industry with big gains, especially across NBFCs and PSU banks. The Bank Nifty was up 2.8 per cent. Engineering and construction stocks like Larsen and GMR Infra saw strong buying. Metals and cement also saw bullishness as did pharma.
MICRO TECHNICALS
LARSEN & TOUBRO
Current Price: Rs 1,564.3
Target Price: Rs 1,650
The priceline has just completed a bullish saucer formation with a projected target in the range of Rs 1,650- Rs 1,670. There is also resistance in that zone. Keep a stop at Rs 1,550 and go long. Add to the position beyond Rs 1,580 and clear it at Rs 1,650.
HERO HONDA
Current Price: Rs 1,777
Target Price: Rs 1,900
The stock hit a new high on strong volumes. The projected target is Rs 1880- Rs 1900 but error margins are large due to the stock being in a new zone. Keep a trailing stop at Rs 1,750 and go long. Increase the position above Rs 1,800. Reset the stop upwards by Rs 25 for every 25-point move.
IDFC
Current Price: Rs 159.6
Target Price: Rs 167
The stock jumped on massive volume. It has sufficient momentum to test resistance at Rs 167 and it may go further. Keep a stop at Rs 156 and go long. Add to the position above Rs 161. Book 50 per cent profit at Rs 167 and reset the stop to Rs 165.
SESA GOA
Current Price: Rs 400.35
Target Price: Rs 415
The stock has shot up on high volumes. It's likely to move until the Rs 415- Rs 420 level before running into heavy resistance. Keep a stop at Rs 395 and go long. Start booking profits above Rs 415. But note that if Sesa Goa closes above Rs 420, it could run until Rs 440.
MOSER BAER
Current Price: Rs 75.85
Target Price: Rs 81
The stock jumped from its 2010 low on very high volume. Too early to say if this is a long-term trend reversal or a technical recovery. However, there's enough momentum to go to Rs 81- Rs 82. Keep a stop at Rs 73 and go long. Book profits above Rs 81.
