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| The market completed a short, sharp correction and then surged again after the settlement day. The Nifty ended at 1555.9 points with a week-on-week rise of 3.31 per cent.
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| The Sensex was up by 3.14 per cent at 4906.87 points. The Defty rose 3.41 per cent as the rupee resumed its climb.
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| Breadth was reasonable. Volumes rose sharply towards the latter part of the week alongside rising prices. Advances outnumbered Declines comfortably.
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| The broad BSE 500 Index rose by 3.3 per cent. The Nifty put-call ratio again dipped into the overbought zone of 0.25 as long positions were rolled over into November.
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| Outlook: The market should continue rising next week although a continuation of the uptrend cannot be absolutely confirmed until the previous tops of Sensex 4951/Nifty 1575 are exceeded.
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| The bounces on Thursday and Friday were backed by excellent volumes and positive signals from a basket of leading and lagging indicators including the RSI, the ROC and the 10-DMA, which has usually given reliable signals since April 2003.
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| Rationale: The monthly F&O settlement caused exaggerated selling pressure. The Nifty's reaction came close to the first Fibonacci retracement/support level of 1425 although the Sensex stayed well above the equivalent level of 4480.
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| Since the reaction has led to most indicators moving down into oversold zones and then turning around and offering buy signals, the market probably fell enough to re-energise the bulls.
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| Counter-view: It is possible that the market could remain inside a trading range of roughly Sensex 4600-4950/Nifty 1435-1575. Or even that it could drop further.
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| The renewal of the uptrend would only be completely confirmed when the previous peaks of 4950/1575 are exceeded and there will certainly be resistance at that zone. Cautious traders could stay out until action at that level resolves one way or the other.
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| However, the background indicators strongly suggest that the market will beat those tops quite soon and our minimum expectations would be an upmove till the 4951/1575 levels.
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| Bulls and bears: The bullishness was well-distributed across sectors. PSU stocks looked among the more promising segments with BPCL, Bhel, BEL, Gail and Concor contributing to the rise.
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| Cement/construction stocks like Grasim, Gujarat Ambuja and Jaiprakash also saw enthusiastic buying.
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| Both GE Shipping and SCI had their supporters. Banks like ICICI, Bank of Baroda and PNB were bullish. Bajaj Auto, M&M and Hero Honda also spurted.
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| In the power sector, BSES, Tata Power and Siemens saw investment-based spikes. Among technology stocks, Digital, HCL Technologies, NIIT, Bharti Tele, Moser Baer and Mphasis BFL were bullish.
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| Cipla, Sun Pharma and Dr Reddy's represented the pharma sector. Investment buying in Tisco, Bharat Forge, Hindalco and Sterlite suggested continuing interest in metals. IPCL, Tata Chem and Bausch & Lomb also saw support.
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| MICRO TECHNICALS
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| CONCOR
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| Current price: 490
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Target price: 540
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| The stock seems to be bouncing after a recent sharp correction. It has seen a sharp spike moving up from the 390-level in just three sessions without, however, developing strong volumes. That's a danger signal.
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| Although the projected target on pure price-pattern would be in the 565 range, the low volumes suggest that it will not cross resistance at the previous peaks in the 540-550 range.
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| There is also resistance starting at the current levels and going all the way to 502. Either take a long position with a stop at 478 or, wait until Concor has closed above 502 to take a position.
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| GE SHIPPING
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| Current price: 95.8
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Target price: NA
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| The stock has made a sharp breakout from a recent trading range. It has seen enhanced trading volumes during the move. In the last three months, it has hit successive 10-year highs.
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| Unfortunately, it isn't possible to project a reliable target from this formation nor is it possible to guess at a possible timeframe for returns.
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| However, there is good support at around 88. Our suggestion would be to take delivery, set a stop at 88 and hold for upto three-four months.
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| HERO HONDA
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| Current price: 353
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Target price: 380
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| The stock jumped past severe resistance at the 340-levels to complete a bullish saucer formation. It has consistently generated high volumes in the last three-four sessions while finishing the breakout. The target on this move would be somewhere in the 380-385 zone.
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| It is however, difficult to set a reasonable stop-loss since the stock has developed a large intra-day range. The safe stop would be at 327 - anything higher may be triggered by a minor twitch.
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| Traders might compromise with a stop at 340 with the provision to buy again if the stock rises past 350.
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| TATA POWER
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| Current price: 235.75
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Target price: 245
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| The stock has just completed a small breakout that has a short-term target of 245. This move has been backed by decent volumes and good momentum indicators. It has reliable support at around 225.
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| The long-term target of the stock (attainable over four months) would be in the range of 310. It's worth going long, with a stop at 225 and the intention to book partial profits at 245. That way, it would be possible to create a long-term position at a lower average cost of acquisition.
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| TATA CHEM
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| Current price: 125
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Target price: 133
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| The stock has completed a bullish formation on high volumes with a strong breakout. It has an upside target of at least 133 and possibly 140.
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| It also has reliable support around 121. Set a stop at 120 and go long. Start booking partial profits above 132.
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| (The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.) |
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