Market may target 200 DMA at 3,450 in coming weeks

The massive resistance at around 3,450 is unlikely to be overcome unless there is a volume explosion.

The market continued to surge ahead. The Nifty hit intra-days highs of 3,400-plus before settling to close at 3,342 points for a gain of 4.08 per cent. The Sensex was up 4.4 per cent at 10,803 points. The Defty gained 4.75 per cent as the rupee recovered to above the 50 level.

While FIIs were heavy buyers through the week, domestic institutions also bought, thereby contributing to the rally. Volumes rose perceptibly in both the cash and derivative segments. The advances-to-declines ratio was positive. The broader BSE 500 was up 5.2 per cent.

Outlook: Most of the signals were positive and the market tested resistance at around 3,400. However, the rally is looking overbought and a reaction is overdue. There is massive resistance at around 3,450. That is unlikely to be overcome unless there's a volume explosion. On the downside, there's support at around 3,225 and strong secondary support at 3,100.

Rationale: The market has seen gains of over 31 per cent since March 6, rallying from the 2,539 mark. It was unable to beat resistance between 3,350 and 3,400, though it tested that level in the last two sessions. Momentum signals are overbought and the RSI is also pretty high. This could mean a reaction. If this is a typical bear market rally, the downturn would be severe. The market could easily lose back the 30 per cent it has gained in the next four weeks.

Counter-view: The 200 Day Moving Average is between 3,440 and 3,470, depending on method of computation. If the Nifty closes above that level, there would be room for optimism and hopes that the long-term bear market was coming to an end. In theory, the rally could last for up to six weeks. But proximity to elections and Fibonacci time calculations suggest that it is likely to peter out within the next 5-10 sessions. Either way, expect high intra-day volatility on high volumes.

Bulls & Bears: The Nifty Junior and Midcaps 50 outperformed the Nifty/Sensex pair this week, mainly because the gainers within these indices rose far more than the losers fell. Metals, real estate and housing finance stocks were among the bullish drivers with most major banks also doing well.

IT stocks saw a small pullback as the rupee strengthened. However more than short-term currency fluctuations, Infosys' 2008-09 results and advisory are liable to prove crucial to future direction in IT industry scrips. Towards the end of the truncated week, stocks started running into resistance at higher levels, mirroring the position of the indices.

MICRO TECHNICALS

ICICI Bank
Current price: Rs 398
Target price: Rs 365

The stock is ripe for some profit-booking. It's hitting resistance above Rs 400. On the downside, there is support between Rs 360-Rs 370 and that is likely to be tested on intra-day basis at least. Keep a stop at Rs 405 and go short. Book profits below Rs 365. Be prepared for 10 per cent intra-day swings.

Punj Lloyd
Current price: Rs 114
Target price: Rs 125

The stock has made what seems like a valid breakout from a base at Rs 105. It has a potential target of Rs 125. Keep a stop at Rs 110 and go long. Start booking profits above Rs 122. If the stock dips below Rs 106, the next reliable support is at Rs 97. So a short would be possible.

Suzlon Energy
Current price: Rs 57.5
Target price: Rs 63

The stock has made a breakout past resistance at Rs 54 on a volume expansion. It has a potential target of Rs 63 and perhaps Rs 65. Keep a stop at Rs 55 and go long. There is massive resistance at Rs 67- Rs 68 so the stock is very unlikely to cross the level.

LIC Housing
Current price: Rs 282
Target price: Rs 300

The stock has broken out past resistance at Rs 250 on high volumes. It could achieve a target of about 300. Keep a stop at Rs 276 and go long. Be prepared for major bursts of volatility in what is usually a very stable stock. Book some profits above the Rs 290-mark.

Unitech
Current price: Rs 42
Target price: Rs 48

The stock has moved up on strong volume expansion. It has a potential upside till the Rs 48 level and if there is a burst of profit-booking, it could collapse back till the Rs 37-Rs 38 level. Keep a stop at Rs 40.5 and go long. Start booking profits above Rs 46.

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All eye will be on Satyam Computers today, as the winner in the bidding process is likely to be revealed today. The price is likely to be between Rs50- Rs55 according to market sources. Technology will be the hot sector to watch out in the next few days. Infosys Technologies is expected to announce its Q4 numbers on Wednesday and these numbers are likely to set the tone for the Indian markets in the short run.

We believe that sme of the midcaps have moved up too much too fast and it is in the best interests of the investors to book some profits in theses stocks. We strongly recommend investors paring their holdings in stocks like Essar Oil and Reliance Ind Infra at the current levels

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Positive opening on cards, Sensex close to 11,000 mark

Watch out for sesa Goa, Tata Steel and Hindalco in this space.

Power stocks might be attractive in today's trade and NTPC is ikely to move higher after announcing expansion plans. GVK Power is another stock we are bullish about, as the stock looks attractive at the current levels.

It is time to book some profits in stocks that have made a vertical move up. Exit stocks like Reliance Infra, prime focus, Kavveri Telecom and Spice Communication in this rally. Overall, the markets are expected to finish the short week on a positive note.

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Market to correct sharply, Exit speculative Midcaps

As mention on Monday be on bear side for Today markets are likely to correct sharply. Expect the becnhmark index to lose 4 percent or more than 400 points for the day, as investors are likely to book profits

As expected the markets are ripe for correction and we might see a huge wave of selling in the first hour of trade. Some of our favorite short selling trades today is Reliance Communications (Rs 218) which has gained over 70 percent from its 52 week low, Metal stocks like Tata Steel and Hindalco are other stocks in the index that might correct and might provide a great opportunity to short.

We advice investors to get rid of speculative stocks that have been on rage in the past few weeks. Investors can look at booking profits in Essar Oil, Deccan Chronicle and Nagarjuan Constructions that have gained nearly 80 to 100 percent in the past month. Bears are likely to dominate the whole day. We advice investors against bottom fishing in this market

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Nifty 3300+ Seems

Tech sector might steal the thunder today as the sector has underperformed the Sensex in the past few weeks. Also the news of two multi-million contracts being awarded to HCL Tech, might provide the mich needed fuel for technology stocks. We like midcap stocks like Mastek and Mindree in this space from a trading perspective

Hospital stocks like Apollo Hospitals and Fortis Healthcare are also likely to be under the radar as Wockhardt plans to sell 24% of stake in its subsidiary Wockhardt Hospitals

Radar stock - Hcl,Satyam.....


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Bulls in command, Midcaps to lead the rally

we strongly recommend Bajaj Hindustan Sugar at the current level of Rs 50 for atleast a 20 percent appreciation.


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Time to book some profits, Keep an eye on sugar stocks

SELL
Wockpharma - target for clients

We might see a small bull back in banking and real estate stocks today.

Investors can book some profits in metal stocks like Tata steel and Hindalco on an upmove today. Most of the action is likely to be limited to the speculative midcap stocks.

Tea stocks were hot yesterday and its time to take a break these stocks. Book profits in Harrison Malyalam and Jayshree Tea, as the move is not convincing. ICSA, Skumars Nationwide and Bajaj Hindustan are the stocks to watch out for the next few sessions. Finally, we don't make tea without sugar. So watch out for Sugar stocks to rally today

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