Mild upswing likely

MACRO TECHNICALS

There are no indicators that suggest a massive bias in any direction.

The market continued to show nervous jitters without much net movement. The Sensex ended nominally 0.15 per cent ahead week-on-week by closing at 6183.24 points.

The Nifty was down 0.3 per cent closing at 1925.3 points. The Defty was down 0.29 per cent as the rupee-dollar equation remained almost balanced.

Breadth and background signals were quite negative. The BSE 500 was down 1.07 per cent. Declines outnumbered advances by a large multiple. The Nifty put-call ratio was steady at about 0.44 which is neutral territory.

Outlook: The market appears to have gone into a period of range-trading. The Nifty is ranging between 1900-1950 (Sensex 6050-6250) and there is currently a mild downside bias if anything, going purely by price-lines.

However, momentum indicators suggest that next week could start with a mild upswing. It is unlikely that the indices will breakout past the stated resistance levels without a sharp volume expansion or some external trigger such as Budget-related rumours.

Rationale: The most difficult technical call is the direction of breakout from a trading range. There are no apparent indicators that suggest a massive bias in any direction.

However, pre-Budget trading generally tends to show a bullish flavour especially in the last two weeks of February. Since the long-term trend is up, this may well happen. Until it does, there will be little action of note.

Counter-view: The last two weeks have seen a distinct under-current of nervousness and an unexpectedly bearish stance from FIIs. If early Budget rumours suggest a lack of direction or harsh imposts, and that is coupled to bad news about the US economy, the market could go into a tailspin.

Bulls and bears: Several assorted stocks appeared to be bullish. This list includes ABB, Apollo Tyres, Bharat Forge, Cipla, Dr Reddy's, Finolex Cables, HCL Technologies, IDBI, ITC, L&T, NIIT, Saw Pipes and TV 18.

The cement twins ACC and Gujarat Ambuja saw a sell off following a lower-than-expected open offer for ACC. Several smaller pharma stocks such as Aurobindo Pharma and Sun Pharma appeared to be weak.

MICRO TECHNICALS

BHARAT FORGE
Current price: 1197.8
Target price: 1350

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The stock is poised on the verge of completing a bullish formation and it has developed higher volumes as well. A third successive close above 1185 levels would imply a short-term target of about 1350 is achievable. Go long and keep a stop at 1180.

APOLLO TYRES
Current price: 250
Target price: NA

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The stock has bounced from good support at 245. It is slightly short on volumes but it has a fairly strong price formation. The near-term target should be about 260 and it may move a bit further to around 275 if the resistance at 260 is broken.

DR REDDY'S
Current price: 721
Target price: 755, 770

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The stock has seen a sharp fall from 870 levels. It appears to have found reliable support at 700 and there was a sharp pickup on Thursday. This is probably just a technical rally which means it is unlikely to be sustained for very long.

However, it could result in a pullback till the 770 levels before it went into another bearish phase. Keep a stop at 705 and go long, booking profits above 750 if you want to be safe because there is strong resistance above 755.

FINOLEX CABLES
Current price: 154
Target price: NA

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The stock has gained steadily since it bottomed out at about 145. This looks like a consolidation at the end of a long bearish move.

There is strong resistance just above the current price but it appears as though the long-term trend of the stock has changed for the better.

May be worth a delivery position with the intention of holding until just before the Budget. Potentially, the scrip has a target of around 205. Keep a stop at 145.

ITC
Current price: 1378
Target price: 1430

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The stock zoomed 11 per cent on the basis of a favourable court ruling. This move came accompanied by a massive volume expansion. It should have a minimum target of 1430 at least and it may move a lot further.

It is difficult to compute a realistic upside target since the stock is already at a split-adjusted all-time high. Take delivery and hold for a few weeks with a stop at 1325.

TV-18
Current price: 234
Target price: NA

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The stock has risen on the back of strong volumes. On the basis of the current chart formation, it should have a target in the range of 255 at least. It could travel further given the strong volume action. Go long and keep a stop at 225.

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