The overall trend remained bullish during the week except on Friday when the market closed sharply down in a reaction to the Budget proposals. The price action in the recent weeks has led to a considerable drop in volatility. This typically is followed by a sharp expansion in volatility triggered by a sharp explosive move in price. 
Given this backdrop, a sharp move in prices appears to be on the cards. Though the rally to 18,800-19,000 is the favoured view, it would be prudent to wait for the price action in the next few days to indicate the direction of the breakout. A close above 18,200 would indicate that the index is headed towards higher levels while a close below 17,000 would lead to a test of the support zone at 15,300-15,000.
With the Budget and option expiry behind us, the market could get into a decisive trending phase soon. As observed last week, the daily trend is still bullish and there is a case for a short-term rally. That quite a few index heavyweights are trading in the oversold region lends credence to the short-term bullish view. From a trading perspective, it would be safer to wait for confirmation, in the form of breach of crucial levels, before committing funds.
Nifty (5,223.5)
After a sharp rally in the first two trading sessions of the week, the action turned choppy since Wednesday. Though the index closed on a weak note on Friday, the recent price action has not negated the short-term bullish view expressed in recent weeks. A rally to 5,580-5,630 is the preferred view and would remain so, till such time the bearish trigger-level of 4,940 is not breached.
As observed in earlier weeks, a test of the key support zone at 4,450-4,600 is the favoured view from a medium-term perspective. A fall to this support zone is likely to be preceded by a short-term spike to 5,580-5,630. The immediate support zone is at 5,030-5,060.
Long positions may be considered on weakness with a stop loss at 4,940. Investors may either reduce or hedge their long positions on a move past 5,545. stocks such as Mahindra & Mahindra, BHEL, Larsen & Toubro and SBI appear promising from the large-cap spaceBSE Auto Index (4,887.17)
The index has been in a broad trading range since May 2006. Though there is a possibility of the next major uptrend having commenced at the recent low of 4,495, there is no confirmation as yet. The short-term outlook is bullish and a move to 5,150-5,200 appears likely. A close above 5,400 would be an early indicator that the index is in the early stages of the next major upward move.
Key pivotals
Dr.Reddy's Labs (Rs 583)
After a steady downtrend, at least a temporary low appears to be in place at Rs 501. The stock could seek higher levels and a move to Rs 610-615 appears likely. Fresh long positions may be considered on weakness with a stop loss at Rs 535. Short-term traders may take profits on evidence of weakness at or beyond Rs 615 as the stock would then get into an overbought region.
Reliance Petroleum (Rs 175.2)
The short-term outlook is bullish and the stock could move to the immediate resistance zone at Rs 195-200. The bullish view would be invalidated on a close below Rs 161. Long positions may be considered with a stop loss at Rs 161. A close above Rs.202 could lead to a rally to Rs 215-220. Going by the recent price action, a rally to Rs 215 is the favoured view.
Axis Bank (Rs 1019)
The stock has displayed amazing resilience amidst the sell-off witnessed in the banking sector in the recent weeks. The short term view is bullish and a move to Rs 1,100-1,125 appears likely. Stop loss for long positions may be placed at Rs 950 on daily closing basis. A trailing stop loss may be used use in the event of a rally past Rs 1,125.
Ashok Leyland (Rs 37.5)
After a sharp sell-off in the recent weeks, the stock is in a consolidation phase in the past few days. There is case for a short-term upward move to Rs 44-45. This view would be valid till such time the stop loss at Rs 34 is not breached. Stop loss for long positions may be placed at Rs 34 on closing basis.
No comments:
Post a Comment