Column

Sensex (14868.25): A bearish trend prevailed as anticipated last week. While the global sell-off did have an impact on domestic market, it is positive to notice that the crucial support at 14,500 was not breached during the week. The 14,500-14,550 range marks the highest weekly close recorded in February and also coincides with the 38.2% Fibonacci retracement of the rally from 12,316 to 15,868.

The recent fall would still be in realm of a short-term correction to the earlier rally as long as this crucial support zone is not violated. A weekly close below 14,500 would be an early indication that the fall could morph into a reversal of the bullish trend witnessed in the recent years. A breach of the trendline connecting the lows at 8,799 and 12,316 would confirm that the market is bracing for a correction of a slightly higher order.

It would be safer to wait for price action to unfold and assess whether the key support level holds. Investors may reduce exposures on a rally and remain in cash. A close above 15,550 would indicate that the worst is over and the index is on course to move towards the target zone of 16,800-17,000.

Nifty (4333.35): Though the index moved closer to the resistance zone of 4,550-4,560 mentioned last week, it failed to get past this level. The sharp recovery after the initial sell-off on Friday indicates inherent strength in the market. As observed in earlier weeks, there are no signs of the reversal of long term uptrend.

The signs of a completion of the recent correction are not visible either. While a close below 4,100 would mark the dawn of a long term downtrend, a close above 4,550 would indicate the resumption of the earlier uptrend.

Key pivotals:
Tata Motors (Rs 669.4):The stock has taken a knock along with other automobile companies. The recent fall appears complete at the low of Rs 630 recorded a few days ago. The short-term trend is bullish and a move to Rs 715-720 appears likely. The bullish view would be invalidated on a close below Rs 640. Have a stop loss at Rs 639 on a daily closing basis and use price weakness to take fresh exposures. A trailing stop loss may be used in the event of a move past the target zone.

Infosys Technologies (Rs 1,960): The stock bounced off a crucial support zone at Rs 1,850-1,860. The short term trend is bullish and the stock could move to the immediate resistance zone at Rs 2,050-2,060 range. A close above Rs 2,060 would impart further momentum to the uptrend and a further move to Rs 2,150-2,160 appears likely. Have a stop loss at Rs 1,840 for long positions. Fresh exposures may be considered on weakness with the same stop loss.

TCS (Rs 1,114.5): After a prolonged downward corrective phase, the stock appears to have made a temporary bottom at Rs1,070. The short term outlook is bullish and a move past the immediate resistance at Rs 1,200 would confirm this view. The stock could then move to Rs 1,275-1,300. Have a stop loss at Rs 1,080 on a closing basis for long positions. Exposures may be enhanced with the same stop loss.
Stock of the week:

Dena Bank (Rs 57.6): The stock is in a major uptrend and appears to have the potential to move to the immediate target range of Rs 68-70. The bullish view would be intact as long as the support at Rs 50 is not breached. Investors may settle for a stop loss of Rs 50. Short-term traders may consider long positions with a stop loss at Rs 53. While a close below Rs 53 would be a sign of short-term weakness, only a close below Rs 50 would negate the bullish view.

(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. Feedback may be sent to
bkrish16@gmail.com)