The news of fall in value of the rupee and the international prices of oil has not affected the market sentiment. The markets have rallied in spite of the obvious pitfalls. This possibly suggests that the markets have bottomed out and the rally in the values of the software stocks has just started. The outlook remains bright and there are several reasons why it is so.

Last week it was expected that the index should rally to around 4460 points and once there is a break above the level of 4460 points the index should see a rally to around 4553 points. The index made a high for the week at 4500 points after which the index went into a range bound movement between 4500 to 4424 points. The index opened the week with a gap above the level of 4374 points a key resistance level. The market rallied on and then the index went in a sideways range between 4500-4424 points. The gap opening suggests that the index has formed the bullish island reversal pattern. On the weekly charts the index has again formed a bullish long white candle.

The sideways since last four days movement suggests that the index has formed a continuation pattern called as the `upside gapping play'. This pattern is a continuation pattern and the market could see a rally to higher levels. The index moves in range of 4424-4500 points and if there has to be rally in the market the index needs to rally above the level of 4500 points.

The market could see a rally to higher levels. The supporting indicators are in a buy mode. The Moving Averages Convergence Divergence (MACD) is above its trigger line giving a buy signal. The eight period Relative Strength Index (RSI) is slightly in the overbought zone. The index has a strong support at the level of 4374 points. If the market breaks below this there could be decline to around 4267 points. If the index rallies above the level of 4500 points there could be a rally to around 4640 points.

Sterlite
The price has broken above it rising trendline and the crucial breakout level is at the level of Rs 785. The price has just broken above the level of Rs 785 and if the breakout holds there could be a rally to around Rs 1,150.

One may buy the stock at current levels and put a stop below Rs 741.

Ranbaxy
The price has just formed a long white candle which is a bullish sign. The price may rally to around Rs 795 in the medium term. Like Sterlite this stock has also broken above its falling trendline. One may buy and put a stop loss below Rs 602.

Pfizer
The price of this stock has seen a steady rise during the week. The price could see a clear run to around Rs 752 in the medium term. One may buy the stock and keep a stop loss below Rs 549.

ICICI Ltd
The price of this stock has just above the support of Rs 103. One may sell this stock short for a target of Rs 92 and keep a stop loss above Rs 105.

Pentamedia Graphics
The price of this stock is in a rallying mode. One may consider buying this stock on breakout from the level of Rs 478 for a target of Rs 547. Keep a stop loss below Rs 434.

(The writers e-mail address is shahani1@yahoo.com)