Resistance above 3830

MACRO TECHNICALS

Weak momentum indicators, negative breadth and intermediate uptrend lasting for five months are sell signals.

The market surged to a new set of record highs after a dip mid-week. The Sensex closed at 13282.91 points for a gain of 1.16 per cent. The Nifty rose by 0.77 per cent closing at 3834.75 points. The Defty rose by 1.12 per cent as the rupee continued to gain versus the dollar.

Volumes rose perceptibly, even through the mini-correction "� the FIIs were net buyers last week but Indian mutuals sold in mid-week. Declines somewhat outnumbered advances but the numbers were nearly equal on the NSE.

The BSE 500 outshone the Sensex/Nifty with a rise of 1.33 per cent. Both the Bank Nifty and the CNX IT outdid the broader market, rising by 2.58 per cent and 1.85 per cent respectively.

Outlook: The major market indices must be close to correction but the old saw about not calling a correction until the priceline drops holds good.

The Nifty's target of 3850 has been nearly achieved. There is some resistance above 3830. The Nifty will either double/multiple-top at 3850 before dropping through successive supports till it hits 3650. Or, if it sails through 3850, it will keep going for another 100 points.

Rationale: The momentum indicators have been weak for months and that's unusual in a strong uptrending market. Breadth has also been negative for a while. The intermediate uptrend has lasted five months, which is well past its "sell-by" date.

All these are sell signals. But the price has continued to rise and until price drops to confirm the negative signals, we cannot suggest a sell. All one can do is set temporary support/resistance limits and watch the trend.

Counter-view: The FIIs remain positive "� they are still buying heavily at these highs. The Indian mutual funds have been net-positive through November 1-9. If the big players are still bullish, the chances are, the market won't collapse.

Bulls & bears: The banking sector continues to outperform the major indices and this week, HDFC Bank and ICICI Bank led the charge with UTI Bank also strong.

In IT, HCL Tech was the strongest performer. There were assorted winners such as Gujarat Ambuja, Hind Lever, IPCL, Mahindra, Reliance Energy, Siemens, Sun Pharma, Suzlon Energy, JP Associates, Moser Baer and NDTV.

On the downside, selling continued in Bajaj Auto and in PSU refiners such as BPCL and HPCL. GE Shipping and ACC also saw an apparent institutional sell-off.

MICRO TECHNICALS

BPCL
Current Price: 363.75
Target Price: 335

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The stock has dropped from 415 in just five sessions but the volumes have not been very high. It broke a key support on Friday at 365.

The target would be about 335 though there is some support at about 345-350. Keep a stop at 370 and go short. Cover below 340.

HDFC Bank
Current Price: 1044.5
Target Price: 1050, 1120

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If it closes above 1050, we could expect a target in the region of 1120. However, there is plenty of resistance at the current level and the downside is about 1020. Unless it closes above 1050 with volumes, the formation is likely to fail.

Over the long-term, the pattern is very strong so, you could take delivery with a stop at 1020 and a time frame of six weeks.

Mahindra & Mahindra
Current Price: 831
Target Price: 875

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The stock has shot up on a volume expansion. One can project a target of 875 though this is highly likely to be inaccurate. M&M is at an alltime high and all projections are dicey with no price history.

On the whole, the pattern is strong enough to hope that 875 will be exceeded. Keep a stop at 805 and go long.

NDTV
Current Price: 242.7
Target Price: 260-265

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The stock showed an engulfing pattern on Friday and its high-low range of 246-225 was much larger than in the near-past.

This is usually a good short-term bullish signal. The target would be around 265. NDTV has resistance above 260 so it would be prudent to book profits there. Keep a stop at 235 and go long.

Suzlon Energy
Current Price:1430.85
Target Price: 1460

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It has moved to a new all-time high but volumes are not particularly good. The minimum price target would be about 1460 but this is likely to be exceeded, given the strong pattern.

Keep a stop at 1390 and go long. Move the stop up to 1430 and book only partial profits if 1460 is hit.

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