Support at 3750 to hold

MACRO TECHNICALS

Unless volumes climb, the likeliest move this week for the Nifty will be between 3750-3925 points.

The market landed somewhat lower after a week of volatile trading. The Sensex closed at 13471, with a loss of 1.05 per cent.

The Nifty ended up losing 0.45 per cent closing at 3871.15 points The Defty was down 0.11 per cent as the rupee rose due to the CRR hike.

Breadth signals were mixed. Volumes were low in general and lower on the days with rising prices. However advances out-numbered declines towards the latter part of the week.

The BSE-500 lost 0.92 per cent. The Bank Nifty lost a disproportionate 2.82 per cent while the CNX IT lost 1.26 per cent.

In institutional activity, mutual funds were net buyers until Thursday, while the FIIs were heavy sellers except on Friday. The Nifty put-call ratio has dipped to around the 1 mark.

Outlook: The Nifty held above a support at 3750 through the week. By the weekend, momentum indicators were starting to perk up. That's positive but on the upside, it couldn't penetrate resistance at 3925.

Unless volumes climb, the likeliest move next week is between 3750-3925 "� the implication is that there's a downside of 120-odd points versus a potential upside of 50-odd.

Rationale: The Nifty has displayed higher bottoms (confirmed by the Sensex) and momentum also seems to be mildly positive"�this suggests that the intermediate trend isn't bad.

However the short-term weakness persists and the lack of volumes is crucial. So we can expect the 3750 support to hold but the 3925 resistance is unlikely to be broken without a volume expansion.

Counter-view: The market is delicately poised and sentiment is weak. If 3750 does break, the next support is 3650 and if that is broken, the Nifty could dip till the 3575 level at the least. And the sequence of lower bottoms would confirm that the intermediate trend has reversed.

Bulls & Bears: Most stocks will move with the market. Bank scrips will probably continue to do worse for another week, maybe longer. There are a few stocks which seem independently bullish "� most are from the pharma or technology sectors.

Mahindra & Mahindra is the only old economy scrip which looks markedly bullish. Cipla, Lupin and Nicholas are looking strong. Among tech stocks, MTNL, Reliance Communication, Mphasis and Polaris Software look the best.

MICRO TECHNICALS

Mahindra & Mahindra
Current Price: 870.25
Target Price: 910

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The stock completed a high-volume breakout at 850. It has a target of 910. Keep a stop at 855 and go long. Start booking profits above 900. If 850 is broken, go short with a target of 835 and a stop at 855.

Century Textiles
Current Price: 657.45
Target price: 685

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The stock has generates strong volumes and has, by and large, shrugged off the generally bearish sentiments since December 8. It has a resistance at 670 and above that, the stock could run till the 685-690 range. Keep a stop at 649 and go long.

Nicholas Piramal
Current Price: 258.75
Target Price: 275

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The stock has completed a breakout from a saucer with reasonable volumes. The target would be about 275. Keep a stop at 252 and go long. If 252 is broken, it will bounce from secondary support at 245 with a target of 260. Hence, it is worth buying at 245 if you get that price.

Polaris Software
Current Price: 164.85
Target Price: 175

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The stock has an excellent pattern with all three time-frames looking in phase and bullish. Volumes have been decent. The initial target would be 175. Keep a stop at 159 and go long. It may be worth setting a sliding stop loss and taking a delivery position with a 10-session time-frame. The potential target is 195.

UltraTech Cement
Current Price: 1035.5
Target Price: 1250

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The stock has consolidated in a wedge while the rest of the market has travelled down. It will probably range trade between 1020-1250. Keep a stop at 1015 and go long.

UltraTech has an excellent long-term pattern so it may be worth a delivery position with a three-week perspective.

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