Column

Sensex (18,852.87): The market sentiment was bearish and the weakness across global markets weighed heavily on the domestic market sentiment. After a sustained fall, the index staged a recovery on Friday. The sharp slide witnessed during the week resulted in the breach of the minor support level at 19150-19300 mentioned last week.

Though this short-term support was broken, it is positive to notice that the crucial support of 18200-18400 is still intact. After an intra-day breach of this level, the index bounced back sharply and closed way above this zone on Thursday. The follow-up rally on Friday lends credence to the strength and validity of this support zone.

The bearish trend during the week has not negated the long-term bullish view expressed in the recent weeks. A rally to the initial target zone of 21,500-22,000 is the preferred view. This view would be valid as long as the long term support zone at 17000-17200 is not violated.

The recent price patterns indicate that the downward correction is complete and the next leg of the rally is underway. Investors need to stick to fundamentally sound companies and must realise that building wealth though stock market investment takes time. Patience is a key ingredient to wealth creation and this is something that is often found lacking among market participants.

Nifty (5606.5): The index managed to hold above the important support zone of 5250-5300 mentioned last week. As observed in earlier weeks, the long term outlook remains bullish and the index is on course to move to the target zone of 6400-6500. This would be favoured till such time the bearish trigger level of 5000 is not breached.

The range-bound action witnessed in the past few weeks would comfortably fit in as a correction to the sharp rise from 5070 on October 22 to a high of 6012 recorded on November 1. The corrective phase appears complete and the index is bracing for the next leg of the upward move that would take to the target zone of 6400-6500. A close above 5775 would confirm this view.

CNX Bank Index (8978): This index has been in a strong uptrend and the banking sector stocks have played a key role in bolstering the benchmark indices such as Sensex and the Nifty. The outlook for the index is bullish and the index is headed towards the short-term target zone of 9850-10000.Only a close below 8300 would negate the bullish view.

Key pivotals:

Reliance Communications (Rs 682): The stocks from the telecom sector have seen waning investor interest in the recent weeks. The frontline stocks from the sector including this stock have taken a knock. The stock is ruling just above the crucial support zone at Rs 640-650. The short-term charts indicate that the recent downward correction is complete and the next leg of the uptrend has commenced. The stock could move to Rs 800-810 range and this view would be in force if the stock holds above Rs 640.

DLF (Rs 869): The stocks from the realty sector have been lying low for a while and the price action on Friday indicates that there was some market interest in this sector. The short-term outlook is bullish and a move to Rs 975-980 appears likely. The positive view would be invalidated on a close below Rs 820. Have a stop loss at Rs 820 for long positions.

Axis Bank (Rs 930): The short-term outlook is positive and the stock could move to the target zone of Rs 1175-1200 mentioned last week. There is a strong support at Rs 875-880 range and the short-term outlook would remain bullish till such time this support zone is not breached. Stop loss for long positions may be placed at Rs.870.

Stock of the week:

Adhunik Mettaliks (Rs 168.4): This has been one of the star performers from the mid-cap space. Despite the recent run-up there appears significant upside potential from current levels. The stock appears to be headed towards the Rs 190-195 range. Investors may have a stop loss at Rs 156 for long positions.

Fresh exposures may also be considered with the same stop loss. Though a breach of Rs 156 would have short-term bearish implications, it would not negate the long-term bullish view. Only a close below Rs 147 would impart long term bearishness.

(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 nothave investment exposure in the stocks discussed above.
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