Range-trading between 4500-4900

MACRO TECHNICALS

Market is more likely to move up than down but be prepared for extreme volatility.

The market saw net losses after violent fluctuations. The Nifty ranged between a high of 4947 (Monday) and a low of 4628 (Tuesday) before closing at 4647 for a net loss of 5.97 per cent.

The Sensex was down 6.28 per cent, closing at 15343 points. The Defty lost 6.3 per cent. The rupee rose to nearly 39 before the RBI intervened to push it back down to 40. FIIs and domestic institutions were net sellers.

Market volumes were low except on Monday when prices dropped on high volumes. Declines far outnumbered advances. The Junior was down 6.3 per cent; the Midcap 50 did comparatively better, losing only 3.22 per cent. The BSE 500 was down 5.5 per cent.

Outlook: Be braced for extreme volatility and 150-point Nifty sessions. The market is more likely to move up than down next week. Range-trading between 4500-4900 is the likeliest possibility. If it closes below 4500, the bear market will intensify.

Rationale: There is some support at current levels and all the way down to 4500. The intermediate trend can be tentatively classified neutral - the lows of last week were higher than the lows of Mid-March. The market is oversold on short-term indicators. A technical bounce will run into resistance above 4900.

Counter-view: Friday saw very bearish trading and another couple of down-sessions like that will test the supports between 4450-4500 that held in Mid-March. The first wave in a new bear market can last three months or longer. If it does, the Nifty will drop below 4400. The long-term trend has been negative since January 10.

Bulls and Bears: It seems ironic to talk about bulls in such a scenario. Obviously bearish counters predominate but some will recover if there's short covering.

Capital goods manufacturers, especially power sector players such as BHEL and Suzlon have taken a beating. Banks face another selloff if there is a CRR hike "� the Bank Nifty has lost a disproportionate 7 per cent. Steel and cement are likely to stay weak. In autos, four-wheeler stocks are heading down while two-wheeler stocks are finding support.

IT and FMCG could be defensive bets with scattered counter-cyclicals available elsewhere. The CNXIT lost a relatively minor 2.65 per cent. Assuming the RBI stays on top of the rupee, IT stocks may stay stable until Infosys' results and guidance.

FMCG major HUL is showing traditional defensive strength. Real estate could be a driver in technical recoveries. Pharma counters such as Divi's Lab, Matrix, Nicholas, Orchid and Ranbaxy are outperforming, Other isolated bullish possibilities are Bajaj Auto, Educomp, GTL, Hero Honda and United Phosphorus

MICRO TECHNICALS

ABB
Current Price: Rs 1,087
Target Price: Rs 1,000

---

The stock has seen selling on massive volumes. It's likely to test support at 1000 level. Keep a stop at 1110 and go short. Start covering below 1030. Be prepared for daily moves in the range of 100-120. If the stop at 1110 is broken, the stock is liable to bounce till the 1160 levels.

Orchid Chemicals
Current Price: Rs 179
Target Price: Rs 210

---

There's been massive institutional buying in the stock over the past 3 weeks, driving the price up from 110 levels on very high volumes. . There's room for the trend to continue until 210 where it will run into huge resistance. Keep a stop at 170 and go long

RNRL
Current Price: Rs 95.4
Target Price: Rs107 (upside)/Rs 80 (downside)

---

The stock has taken a hammering that has pushed it down from a high of 248 to double-digits. It seems to be bottoming. If there's a bounce, the stock could hit 105 very quickly and maybe, even 110. Keep a stop at 91 and go long. If 91 is broken, go short with a target of 80 and a stop at 95.

Unitech
Current Price: Rs 264
Target Price: Rs 290

---

The stock seems to have consolidated near a good support. It has a potential upside till 290 on a technical bounce. Keep a stop at 260 or at 250 if you're confident that this is near the bottom. Take delivery with a 10 session timeframe.

United Phosphorus
Current Price: Rs 278.95
Target Price: Rs 300

---

United Phosphorus has moved up against the market trend albeit on very light volumes. It has a chart pattern with a potential to reach 310. However, there is resistance at 300 and due to the light volumes, it's unlikely to be broken. Keep a stop at 270 and go long.

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