Sensex (17,166.6)
One of the most boring weeks in recent history has just gone by with one somnolent session following another. The NMDC share issue did nothing to lift the mood as it limped its way to full subscription. The bulls and bears are evenly matched at this point and the narrowing range in stock price movement denotes that there will be a snap any moment now; something's gotta give.
Volumes were subdued in both the cash as well as the derivative segment as market participants await clarity on the market's next move. Index put call ratio has declined to 0.89 implying that many among the trading fraternity have squared up their short positions. Open interest too is continuing to pile higher. FIIs were net buyers in all sessions though their enthusiasm waned slightly in the later half of the week.
The Sensex wandered aimlessly in the band between 17,000 and 17,250 before ending the week 1 per cent higher. The series of small stars formed in the daily candlestick chart is an apt reflection of the indecisive state in the market. Oscillators in the daily chart continue to signal a buy but weekly momentum indicators are signalling caution.
The 10-week rate of change oscillator has declined in to the bearish zone. What is more disconcerting is the fact that this oscillator has been diverging negatively since last May implying that there is serious lack of momentum over a medium-term time frame.
Let us take a step backward and try to understand the way the index is moving over the medium-term time frame. A double zigzag pattern was completed in Sensex from the March 2009 low of 8,047 to the October 2009 peak. The momentum began deteriorating from the C wave of this pattern giving the impression of a broad-based sideways movement since August last year.
The movement since October last has multiple connotations. One of the counts is that of an X wave down to 15,330 followed by a flat formation. The minor c of this flat could now be unfolding that has the targets of 17,074 or 17,954. The pattern could, of course, turn in to a triangle or a double or triple three. That would result in the index moving sideways between 14,000 and 18,000 for few more months.
We are assuming that this sideways move is a terminal corrective wave that winds up the up-move since last March. However, a strong move above 18,500 will call for a revision of this view and will imply that the index will make an attempt at getting past 20,000 this year.
As far as the short-term view is concerned, the Sensex is moving sideways with a distinct positive bias. Another spurt higher towards 17,509, 17,790 or 17,967 is possible in the near-term. Investors can however expect plenty of turbulence as the index closes in on the 18,000 mark. Subsequent target is 18,373. Supports for the week ahead would be at 16,766, 16,635 or 16,367. Short-term investors can continue to buy in declines as long as it holds above 16,600.
Nifty (5,137)
The Nifty too was wedged in an extremely tight range last week and finally ended 48 points higher. The mildly positive bias to last week's trade implies that the index can make an attempt to rally towards 5,247 or 5,310 in the days ahead.
The going could get choppy as the index nears its yearly high. Supports for the week are 5,013, 4,973 and 4,898. Short-term traders can buy in declines as long as the index trades above 4,970.
For the medium-term, Nifty appears to be in a flat formation since last November (see explanation given for Sensex above). The minor c of this formation could be unfolding now that has the targets of 5,152 and 5,447. In other words, medium-term target on a strong close above 5,310 would be 5,447. Global equities took a step higher, but the rally was stunted in most European and Latin American benchmarks. CBOE volatility index held above 17.2 recorded on March 5 and rallied to 19.3 in the middle of the week.
But investors appear to have turned more sanguine towards the end of the week resulting in the volatility index closing at 17.6.
Asian benchmarks were relatively more gung-ho Indices such as Jakarta Composite, Karachi 100, KLSE Composite, Philippines Composite Index and so on recorded strong rallies that made them test their previous 2010 peaks.
The movement in the Dow was just as exasperating as the rest of the global benchmarks. It was the surge on Thursday that helped the index close the week with half per cent gain. The index is however closing in on its previous peak of 10730 formed on January 19. As indicated in our previous column, there can be some volatility as the index nears this level resulting in a sideways move between 9,800 and 10,800 for a few more months. Target on a move above 10,800 is 11,300.
Hindustan Unilever (Rs 219.6)
HUL had been under the bear's hammer right from the onset of last week. The stock reversed lower from the intra-week peak of Rs 244.3 to end almost nine per cent lower.
The ostensible reason for this decline is the ongoing marketing war with Procter and Gamble though the P&G stock is moving insouciantly sideways.
The long-term trend in this stock continues to be up. But HUL has strong long-term resistance in the band between Rs 280 and Rs 300 where it peaked in May 2006 and again in July and October 2009.
It is currently in a serious decline from the October 2009 peak of Rs 295. Immediate target for this decline is Rs 215. That is the stop with which medium-term investors should hold this stock.
Key long-term support for the stock is however between Rs 170 and Rs 180 and investors with a long-term horizon can accumulate the stock as it nears this band.
Fortis Healthcare (Rs 181.2)
Fortis Healthcare surged higher on Thursday following the announcement of the company acquiring 23.9 per cent stake in Singapore based Parkway Holdings.
The stock has been in an indomitable uptrend since the November 2009 trough of Rs 96.5, doubling in value in the last five months.
If we extrapolate the up-move from October 2008 low, we get medium term target of Rs 207. Short-term investors can therefore hold the stock with trailing stop of 5 per cent. Others can hold as long as the stock trades above Rs 152.
Balrampur Chini (Rs 93.2)
Sugar stocks were battered down last week on owing to a host of reasons including sharp drop in international sugar prices and the Government cracking down on hoarders.
Balrampur Chini was among the adversely affected stocks in this sector, down almost 17 per cent in the period.
This stock along with its peers in the sugar sector is in a strong decline since October 2009; the stock is down 44 per cent since then.
If we consider the retracement of the up-move in the chart since December 2008, 50 per cent retracement occurs at Rs 98 and 61.8 per cent retracement occurs at Rs 81. Investors can therefore continue to hold the stock as long as it trades above Rs 81.
Decline below this support will however imply that the stock is heading below Rs 50.
Thermax (Rs 685)
Thermax was yet another stock that outshone others as investors cheered the company's joint venture with Babcock and Wilcox for manufacturing super critical boilers.
The stock closed higher in all the sessions to end the week 8 per cent higher. This surge has once again brought the stock to its key intermediate term resistance zone between Rs 700 and Rs 750.
The stock has been struggling to move beyond this zone since early January and it can continue to vacillate in the range between Rs 550 and Rs 750 for few more weeks.
Such a move would however be construed positive from a medium term perspective and investors can buy in declines with stop at Rs 540. Target above Rs 750 is the previous peak at Rs 968.
Fresh purchases should however be avoided on a decline below Rs 540 since that would imply that the stock is heading for Rs 520 or even Rs 450.
Bank of Rajasthan (Rs 63.6)
Bank of Rajasthan was in the news for all the wrong reasons last week as the company was hauled by both the RBI as well as SEBI, making the stock price plunge 13 per cent in the first three sessions. Despite this sharp yank, the stock held above the key support band between Rs 56 and Rs 58. Investors can continue to hold the stock as long as it stays above Rs 56.
Key resistance for the short term is at Rs 73. Fresh purchases are therefore recommended only on a close above Rs 73. —
ICSA India (Rs 133.2): The stock has been witnessing a secular downside movement after it peaked in October at around Rs 230.
After having moved in a narrow path for quite some time now, the stock is trading tantalisingly close to its crucial support level.
As long as it stays below Rs 185, the outlook for the stock appears negative only. Currently, it faces an immediate resistance at Rs 142-144 levels.
A close below Rs 132 could weaken it to Rs 100, though in between Rs 116 and Rs 124 could act as a minor support zones.
On the other hand, a close above Rs 185 can lift the stock to its previous peak levels, though the chances of that happening appear slim in the near future.
F&O pointers
ICSA India futures (market lot 1,200) closed at a premium slight premium to the spot's close of Rs 132.8.
Open interest stood at 40 per cent with respect to the overall marketwide open interest positions.
It, however, shed open position on Friday, indicating unwinding of long positions. This also suggests a weak trend for the counter going ahead.
Options trading provide little cues, as they are not active.
Strategy: Consider shorting ICSA India, with a stop-loss at Rs 142 for a target of Rs 116 (closing day basis).
Trail the stop-loss if the stock trends downward to protect profit opportunities.
Low-risk traders can get out at Rs 126, as the market lot is high.
Follow-up: Last week, we had advised traders to consider short straddle on Cairn India using 270-strike.
The position is marginally out-of-the money currently, due to sharp rise in prices on Friday. As advised, traders can hold on to the strategy for one more week at least.
 | 5137.00 | ( 0.07 %) | 3.60 |  |
| 1 | 2 | 3 | ||
| Resistance | 5156.03 | 5175.07 | 5192.03 | |
| Support | 5120.03 | 5103.07 | 5084.03 | |
 | 17166.62 | ( -0.01 %) | -1.34 |  | |
| 1 | 2 | 3 | |||
| Resistance | 17231.80 | 17296.97 | 17349.41 | ||
| Support | 17114.19 | 17061.75 | 16996.58 | ||
| FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| FII | 12-Mar-2010 | 2651.76 | 2280.08 | 371.68 |
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 12-Mar-2010 | 1324.08 | 1414.89 | -90.81 |
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