Column

Sensex (19698.36): The market sentiment remained bullish and the index registered the highest single-day gain ever on Wednesday. The downtrend in the index was arrested at the support level of 18200-18400 mentioned last week. The recent price action reaffirms the long-term bullish view and the index is on course to move to the short-term target zone of 21500-22000.

There is a confluence of support at 19150-19300 range which coincides with the 38.2% Fibonacci retracement of the recent recovery and there is also an unfilled gap at this range. This price zone is therefore a key level for the index and the trend would remain bullish till such time this zone is not decisively breached.

While a break of 19150 could impart short-term weakness, only a close below 18,300 would have major bearish implications. Investors need to be stock-specific and should have a well-defined trading/investment plan in place. The Indian market is going through an extraordinary phase where stocks have recorded 25-30% gains in a day. Such moves can be captured consistently only by systematic research and well executed trading plan.

Nifty (5906.85): A bullish trend prevailed during the week and the index moved within the striking distance of the 6000-point mark. The long-term outlook remains bullish and the index appears headed towards the immediate target zone of 6400-6500. There is a major support at 5600-5700 range.

A breach of this support zone could lead to the test of the more critical support at 5250-5300. The long-term bullish trend would be invalidated only on a close below 5000. Investors may use intermittent price weakness to build a portfolio of high quality fundamentally sound stocks.

BSE FMCG Index (2231): After a prolonged period of underperformance, the index was back in action this week. The stocks from the FMCG space have been buzzing around over past few days and the recent price patterns indicate that the rally would continue for a while. The index could move to 2550-2600. Investors need to keep a close tab on the FMCG stocks as they could spring a positive surprise in the short-term.

Key pivotals:

ITC (Rs 205): The stock posted a gain of about 21% for the week and was one of the star performers from the large cap universe. The recent surge has been accompanied by increased volumes and the stock appears to be headed towards the next major target of Rs 240-250. Investors may have a stop loss at Rs 188 for long positions. A close below Rs 188 would negate the short-term bullish view.

Indian Oil Corporation (Rs 618): Along with FMCG, the oil refining and marketing companies posted sharp gains during the week. This stock too was one of the top gainers and the recent bull run could take the share price to Rs 680-700 range. A move to this target zone would resume after a short-term correction. The immediate support is at Rs 580-590 and more critical support at Rs 560-570. Investors may use price weakness to buy the stock with a stop loss at Rs.555.

Axis Bank (Rs 975): This is one of the top performers from the banking sector and the stock has significant upside potential from prevailing levels. A move to Rs 1175-1200 appears likely. The positive view would be invalided on a close below Rs 875. Have a stop loss at Rs 875 for long positions. Fresh exposures may also be considered with the same stop loss.

Stock of the week:

DS Kulkarni (Rs 290): The stock has been in a consolidation mode for quite a while and the share price moved past the resistance zone of Rs 290 on Thursday on the back of increased trading volumes. The short-term trend has turned bullish and the stock could move to Rs 345-350.

There is a strong support at Rs 268-275 range and investors may use price weakness to buy the stock with a stop loss at Rs.265. Those willing to wait for a longer time frame may find opportunities to exit at Rs 385-390.

(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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