Column

The medium trend is bullish. A move to the next major target-cum-resistance zone of 16,800-17,000 is expected

Sensex (15,590.42): A bullish trend prevailed and the index edged closer to the earlier high of 15,869. The domestic market sentiment remained unaffected by weak global cues. The index is in a consolidation/corrective phase. This would set the platform for the next move up towards the target zone of 16,000-16,100.

As observed in earlier weeks, a short-term corrective phase is overdue. It remains to be seen if this corrective phase takes the shape of a sharp cut or a sideways consolidation. The medium-trend remains bullish and a move to the next major target-cum-resistance zone of 16,800-17,000 remains the preferred view.

In the event of a short-term correction, there are quite a few support levels for the index to lean on to. The initial support zone is at 15,250-15,300, followed by 14,900-15,000. With earnings season round the corner and quite a few global and domestic factors to react to, the volatility is likely to spike up. Investors may take profits on rally and re-enter on weakness. Sticking to fundamentally sound companies would be a prudent strategy in the present market environment.

Nifty (4,509.5): The index moved up and posted a gain of 45 points for the week. The rally in key indices appears well orchestrated with select stocks keeping the index afloat during the week. Though there could be turbulence in the short term, the index is likely move to the immediate target range of 4,575-4,600.

Key support levels are at 4,400-4,410, followed by 4,250-4,275. After a brief short-term correction, the index is likely to resume its uptrend towards the target zone mentioned above. Stocks such as Bharat Heavy Electricals, Grasim Industries, Tata Steel and Tata Motors could provide the thrust to the index.

CNX Bank Index (6,843): The short-term outlook is bearish and a test of 6,450-6,500 appears likely. The long-term outlook is, however, bullish and a move to 7,200-7,300 range appears likely. A move towards this target zone would resume after the completion of the anticipated short-term correction. Only a close below 6,320 would negate the bullish view.

Key pivotals:
Tata Motors (Rs 695):The price movement was devoid of any significant trend during the week. As observed last week, the stock is in the midst of a short-term corrective phase and could slide to Rs 665-675. Price weakness may be used to take fresh exposures with a stop loss at Rs 645. A move to the target zone of Rs 750-760 would get underway after the completion of the short-term correction.

Tata Steel (Rs 688.3): After a sharp run-up in earlier week, the stock was range-bound during the week gone by. The price pattern during the week has not negated the bullish view expressed last week. After a brief corrective phase, the stock could move to the next target zone of Rs 750-760. The bullish view would be valid as long as the support at Rs 640-650 is not negated. Price weakness may be used to take long positions with a stop loss at Rs 640.

BHEL (Rs 1,885.65): The stock was confined to a corrective phase as anticipated last week. This corrective phase does not appear complete as yet. A test of the support range at Rs 1,750-1,775 appears likely. The rally towards the target zone of Rs 2,100-2,150 would commence on the completion of the short-term corrective phase. Long positions may be considered on dips, with a stop loss at Rs 1,730.

Stock of the week:
Reliance Petroleum (Rs 123):The outlook is bullish and the stock could move to Rs 138-140. In the short-term, the stock could drift lower and could test the support zone at Rs 116-120 range. Long positions may be considered on weakness with a stop loss at Rs 111. The bullish view would be negated on a close below Rs 111. Use a trailing stop loss in the event of a move past the target zone.

(Note: The analysis and views expressed in this column are based on the technical analysis of historical share price action. There is a risk of loss in trading. Views and targets are arrived at by using the Elliott Wave Theory and Point & Figure technique. The author does not have investment exposure in the stocks discussed above. Comments and feedback may be sent to bkrish16@gmail.com)