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Bull run may still be alive
Devangshu Datta in New Delhi |
April 25, 2005
There was a technical recovery in mid-week that eventually led to all round gains. The Sensex closed at 8346.57 points, for a week-on-week gain of 1.57 per cent and the Nifty rose by 0.56 per cent to close at 1967.35 points. The Defty was up 0.56 per cent and the rupee-dollar equation remained stable.
Breadth signals also improved. Advances outnumbered declines for the first time in several weeks. The put-call ratio was in oversold territory by weekend, which was actually a good sign given that it's already in recovery mode. The broad BSE 500 went up by 0.97 per cent.
Outlook: This looks like a weak technical recovery rather than a sustained move mainly because volumes haven't improved.
However, the Nifty could rise till 2000 (Sensex 6500) and next week could start with a couple of good sessions followed by range-trading between 1950-2000. The market is testing a resistance at current levels (Nifty 1970) and there is another major resistance at 2000.
Rationale: The support at 1900 (Sensex 6120) held and that's a good signal because this support coincides with the 200 DMA. That means the long-term bull market may still be alive. Momentum indicators are fairly good; the lack of volumes is the real worry.
Counter-view: Ideally one would have liked a rally supported by more volumes from the 1900 level. A technical bounce is rarely sustainable without volume expansions and it's very possible the market will test 1900 again. If the support at 1900 breaks, the long-term bull trend will be in deep trouble.
Bulls and bears: Trading continues to be stock specific and driven by corporate results or expectations. As such, a fair number of companies seems to be attracting buyers but there's no overall pattern.
Bulls could choose from a motley list that includes majors such as ACC, Arvind Mills, Ashok Leyland, Atlas Copco, BASF, Bharat Electronics, Century Textiles, Escorts, Finolex, GE Shipping, Gujarat Gas, Indian Hotels, Maruti, Nirma, Oriental Bank, Satyam, Sawpipes, Siemens, Sterlite Opticals, Sun Pharma, Titan and Wipro.
Wipro, Current price: 644, Target price: 670
The stock jumped with a huge volume expansion after it declared results that beat the market.
There is some resistance at current levels but there is enough momentum to propel Wipro upto around 670 where it will run into very heavy resistance. Keep a stop at 625.
Arvind Mills, Current price: 123, Target price: 132
The stock has seen a volume build-up along with rising prices over the last week. It will probably run into strong resistance at around 132. If it crosses 132, it could have a long-term target of around 150. Keep a stop at 118 and go long.
Sawpipes, Current price: 316, Target price: 335, 400
The stock completed a strong breakout on high volumes last week. It's clearly bullish and likely to have a short-term target of about 335. The long-term target suggested by bullish weekly chart formations is about 390-400. Keep a stop at 300 and go long.
Sterlite Opticals, Current price: 68, Target price: 72, 79
The stock jumped on Friday along with some volume expansion and will probably reach 72 without much trouble.
There is a massive resistance between 72-79, where it might get stuck range-trading for an indeterminate period. If it crosses 79, it will head for new highs. Accumulate with a stop at 64.
Satyam Computer Services, Current price: 405, Target price: 445
The stock has moved up on some volume expansion. In fact, it's completed a v-shaped formation, which is quite bullish. There's resistance at the current level and higher up at 425 but the chart suggests that there is a good chance of the stock reaching 445. Go long and keep a stop at 395.The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.