Upside bias likely

MACRO TECHNICALS

The market stayed locked inside a tight range with alternating sessions of rises and falls. The Sensex closed at 5196.99 points, ending 0.52 per cent ahead.

The Nifty's rise was even more nominal with the index closing at 1633.4 for a very nominal gain of 0.07 per cent. The Defty actually lost considerable ground, ending down 1.91 per cent as the rupee dropped against the dollar.

Breadth signals were negative by weekend. Declines outnumbered advances and volumes were down slightly although the BSE 500 was ahead by 0.8 per cent. The Nifty put-call ratio rose slightly to around 0.4, which is still neutral territory.

Outlook: The market is likely to keep testing both support and resistance between Sensex 5150-5250 and Nifty 1620-1660 during this week.

The intermediate trend seems bullish; so there could be an upside bias. But short-term signals are pretty nearly neutral, making it tough to call the direction of the short-term trend.

If we back the intermediate trend to continue showing higher tops and bottoms, we could expect a target of Sensex 5400/Nifty 1720 by mid-September.

Rationale: While the trend has been very mild, the market has seen higher tops and bottoms since the last week of June. This has to be classified as an intermediate uptrend and it could continue until late September.

The chart pattern shows the formation of a bullish saucer between May and August. The market will have support at Sensex 5150/Nifty 1620 and this saucer should have the targets mentioned above.

Counter-view: The uptrend has been quite weak and there have been declines in volumes and momentum even as the saucer formation was completed.

It's quite possible that the movement won't reach the slated targets. However, the support at 5150/1620 should hold. If that breaks, there is support all the way down to 5075/1600.

Bulls and bears: Tyre and cement stocks seemed to be fancied by the market last week.

ACC, Gujarat Ambuja and India Cements saw fairly bullish moves. So did Apollo Tyres and MRF. Other stocks that seemed to be definitely bullish included Arvind Mills, Bilt, GE Shipping, P&G and Sesa Goa.

Hindustan Lever and Nocil also looked like possible punts for the optimists. while Maruti appeared to be going through a selloff.

MICRO TECHNICALS

P&G
Current price: 455
Target price: 490

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The stock has completed a bullish formation by closing above the 445 mark. It should have a target in the range of 490-500.

However, the stock is very closely held and liquidity will always be a problem. Given the permanent lack of volumes, only small positions are possible. A stop at 445 is necessary.

ACC
Current price: 257
Target price: NA

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The stock cleared a key resistance at 249. It has now completed a bullish double-bottomed formation with a rise in volumes coinciding with the breakout.

The target would be in the range of 270 and the stock will run into strong resistance at that level. Go long, keep a stop at 248 and be prepared to book partial profits at 270.

APOLLO TYRES
Current price: 205
Target price: NA

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The stock spurted on Friday with an accompanying rise in volumes. By closing over 195, it completed a bullish formation. It would now have a target of around 220 in the short-term and a medium-term target of around 245.

There is a gap between 205-212, which could complicate predictions but the stock seems to have started filling the gap. If you go long, keep a stop at 195 and be prepared to book partial profits at 220.

BILT
Current price: 71.7
Target price: 80

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The stock has started moving up on strong volumes. It now has a short-term target of around 80.

However, the stock also shows signs of having finally pulled out of a long-term downtrend which started in January.

The scrip thus looks like a possible long-term prospect. Either go long with a stop at 68 and the intention of cashing out at 80 or book partial profits and hold a residual position over the next three months.

GE SHIPPING
Current price: 152
Target price: 170

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The stock has just made an upmove which has completed a bullish short-term formation. The stock should now have a short-term target of around 170.

There is useful support at 150. Go long and keep a stop at 149. The lack of volumes in the previous few sessions makes it likely that the stock will struggle to attain the 170 target.

Be prepared to take profits anywhere above 165.

NOCIL
Current price: 18.65
Target price: 20. 25

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The stock has started moving up on huge volumes. It has a short-term target of 20 and a medium-term target of around 25.

It also has a fairly solid support at 18. Keep a stop at about 17.75 and go long.

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