The market perked up right after the special Reliance settlement. The Nifty closed the week at 2900.95 points with a gain of 1.76 per cent.
The Sensex closed at 9520 points with a gain of 1.57 per cent. The Defty closed up by only 1.68 per cent as the rupee weakened slightly after a strong run up.
Breadth signals looked quite healthy. Volumes rose on Friday and advances comfortably outnumbered declines through the week. The BSE 500 rose by 1.12 per cent, which did indicate that trading interest was quite heavily concentrated in large-index stocks.
Outlook: The market appears to have completed a small correction and looks set to move up more in the coming week. The alltime highs of 2928 (Sensex 9680) should be tested in the next 5-10 sessions. There's likely to be a run-up of 4-5 per cent by the Budget.
Rationale: Most momentum indicators and breadth indicators have turned up along with the pricelines. That suggests that, if resistance near the all-time highs is overcome, the market can ride up comfortably. A breakout past 2927 should set up minimum targets of around 3050.
Counter-view: The resistance at 2928 (9680) still needs to be overcome. If it isn't, the entire perspective changes. Instead of having a correction inside a bull-run we would have a pattern of either falling tops or double-tops, both of which are bearish.
A conservative trader will wait for a clear close above that all-time high before committing to long positions.
Bulls& Bears: At the level of individual stocks, the improvement in market conditions shows up in the fact that the vast majority of stocks are neutral or mildly bullish rather than bearish.
The PSU bank segment appears to have bottomed after taking a hammering - but there aren't any obvious movers here.
Some IT stocks as in Wipro, Mphasis BFL, I-Flex and Polaris Software seem to be strongly bullish. Two auto-majors in Tata Motors and Maruti are both bullish while Bajaj also looks promising.
Power equipment stocks such as ABB, BHEL and Siemens are another bullish group. Apart from these, there is scattered interest in HDFC, Indian Hotels and Tisco. Dabur should be another possibly bullish candidate because volumes have improved after the split.
Micro technicals
Bhel
Current price: 1581
Target price: 1650
The stock created a bullish formation when it rose past 1500 on strong volumes. It should have a 5-session target of about 1650. Go long, keep a stop at 1535.
Unfortunately the rise has been so fast there is a considerable downside as well.
Indian Hotels
Current price: 1163
Target price: NA
The stock continues its steady climb. It has seen a run-up on a 40 degree trendline since late December when it was trading at about 950.
It's not possible to project a target on such a formation. Keep a trailing stop at 1125 and go long. For every upmove of 15, raise the stop by 10.
Maruti
Current price: 706
Target price: 730
The stock has jumped on high volumes due to excellent Q3 results. It has a 3-session target of 730 and could rise beyond that. Keep a stop at 680 and go long. Consider booking only partial profits and taking some deliveries at 730.
Tata Motors
Current price: 661
Target price: 700
The stock appears to have just completed a bullish formation. It has a likely target of 700 over the next 5 sessions. Keep a stop at 645 and go long. Book partial profits above 675.
Wipro
Current price:498.75
Target price: 520
The stock has made a breakout by closing above 485 on huge volume expansion. The short-term target could be about 520. Keep a stop at 485 and go long. Expect a fair amount of intra-day volatility.
The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.
