Market seems bullish

MACRO TECHNICALS

The market should continue to climb through the next week "� and perhaps until we reach the Budget.

The market shot up again last week, hitting new highs. The Sensex closed at 9870.79 points for a gain of 3.67 per cent. The Nifty rose 2.82 per cent while the Defty rose 3.17 per cent "� the dollar weakened against every other currency due to weak US GDP figures.

Breadth signals were good "�volumes rose during and after settlement. The ratio of advances to declines was positive and the broad BSE 500 rose by 2.9 per cent. The put-call ratio was high without being in oversold territory.

Outlook: The market should continue to climb through the next week "� and perhaps until we reach the Budget. There is a medium-term target of 3950 Nifty ( Sensex 10100) that appears achievable in the next 15-20 sessions.

Rationale: When the indices broke past the resistance near the previous highs near 2930 (9700) level, it completed a bullish medium-term pattern with the above targets.

Since the breakout came with high volumes and good breadth, these targets are likely to be met. The continuing pattern of higher tops and bottoms means that by definition, the bull-market is still alive.

Counter-view: We are in new territory where technical analysis is always prone to more in the way of errors. There will be profit-booking at every stage. The pre-Budget policy statements could be an unpredictable swing factor "� the FM could talk the market up or down very easily in the next month.

Bulls & bears: Several sectors appear poised for further upmoves, which could push the indices higher. These include metal stocks such as Hindalco, Nalco, Sail and Tisco. Auto stocks such as Bajaj Auto, Tata Motors, Maruti and Hero Honda also look strong.

Banks and financial are showing signs of recovery after taking a hammering "� there is a concerted spike or price and volumes in stocks such as BoB, Bank Of India, Canara Bank, HDFC, ICICI, Oriental Bank, PNB and SBI.

Apart from these, individual heavweights such as Biocon, Bhel, Infosys, Grasim, Larsen, I-Flex and Kochi Refineries are bullish. Colgate and Gujarat Ambuja have generated massive volumes.

MICRO TECHNICALS

Bajaj Auto
Current price: 2207
Target price: 2300

---

The stock completed a breakout on high volumes when it closed above 2150. It has a short-term target of 2300 and it could move further. Keep a stop at 2160 and go long.

Unfortunately there is a downside because the movement has come rather quickly. However the risk: reward ratio seems good.

Biocon
Current price: 477
Target price: 490, 505

---

The stock has bottomed and started moving up off a strong base at 465. It has a short-term target of 490 where it will encounter strong resistance.

Given good volume expansion, it may be able to rise further, till around 505. Keep a stop at 470 and go long.

ICICI
Current price: 619.55
Target price: 660

---

The stock has almost completed a bullish saucer formation on high volumes. It has a target of 660 if it can close above 620 and complete the formation. Keep a stop at 605 or 600 and go long.

Infosys
Current price: 2902
Target price: 2950, 3050

---

The stock has completed a bottoming formation and picked up steam on the recovery. It has a likely short-term target of 2950 where it will run into some resistance.

If the resistance at 2950 is overcome, the stock is likely to move till 3050. Keep a stop at 2850 and go long..

Larsen & Toubro
Current price: 2135
Target price: NA

---

There's been a vertical takeoff in the last 3 sessions and it's been backed by a volume expansion. It's impossible to make target calculations on the basis of this price formation.

However the trend is strong and it can be exploited by going long with trailing stop. Keep a stop at 2040 (Wednesday's close) and go long. Move the stop up 25 points for every 50 point move.

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