Software stocks continued to hog the limelight and most of the top software stocks have shown no signs of weakening in worse market conditions. Stocks like Infosys and Satyam Computers have truly shown remarkable appreciation. Wipro has one of the largest market capitalisations in the Indian stock market. Times change, and new technology stocks have displaced stocks like Reliance, Indian Oil Corporation and other PSU heavyweights in terms of valuations.

The government has been pre-occupied with some important matters like investigation of dug up cricket pitches and attacks on the apex organisations governing the game of cricket in the country. Thus, not too much time was spent on matters of less importance like nursing of the economy among otherthings. There has been a sudden death of important policy announcements in the last few weeks. As such, things have turned dry.

The budget is due in about a month's time and the market movements of selected stocks will be governed by the rumours of what sops are offered to an industry and which companies will be beneficiaries of government sponsored sops. The pre-budget period is a particularly risky one. As prices of certain stocks move up on rumours and if the rumour is unfounded, the prices fall again. Usually, the movement is extremely fast. Investors and traders have to exercise extreme caution in trading as the market can be very violent during this period.

Last week we expected the market to reverse its decline at around 3,185 points. As against this the index showed a decline to 3,197 points before it reversed its downtrend. The market did reverse its direction extremely close to our targeted level of 3,185 points. We have been expecting the market to move in a range of 3,185 points to 3,525points. The price movement of the index does point towards this goal.

The week had only four trading sessions as the market had a day off on account of Id. The movements of the index were in a range as two trading sessions were long white candles and the other two trading sessions' candles were black ones. On the weekly charts the index has formed a small bodied candle which suggests that there is uncertainty in the market. On the daily charts Thursday's trading session had formed a bullish long candle which was followed by a black candle. The size and shape of the white candle is what makes the market appear bullish. In the following week we expect the market to rally to 3,525 points.

The indicators are showing signs of stabilising after the previous week's debacle. The 14-day RSI (relative strength index) is below its overbought level and it has shown signs of stabilising. The daily MACD (moving averages convergence divergence) has given a sell signal. The closing point of the index is almost exactly atthe support level of 3,298 points. The market could open with an upside gap on Monday. If the index breaks below the support of 3,298 points there is a chance that it could decline to around 3,258 points or 3,197 points. If the support of 3,287 points stays intact the index should rise to around 3,525 points. Traders may watch out for the above mentioned levels.

HDFC: Good potential

This stock has shown a breakout from the resistance level of Rs 2,370 and the breakout has been with a heavy increase in volumes. The MACD has given a classic buy signal. The price does show a potential to rally to around Rs 3,200 in the medium term. One may buy with stop loss below Rs 2,370.

Punjab Tractors: Buy at current levels

The stock has entered a new price territory this week as the price showed a breakout beyond Rs 964. The breakout has been wih a heavy increase in volumes. One may buy this stock at current levels. Keep a stop loss below Rs 940.

Vindhya Telelinks: Go long

The price hasshown a break beyond the resistance level of Rs 71.50. Above this the price faces resistance at around Rs 84. The level of Rs 84 is a fairly strong resistance level. Once the price shows a break above Rs 84 the price can rally to around Rs 125. This stock is in the middle of a long-term rally and one may buy this for keeps. Keep a stop loss below Rs 65.

Tata SSL: Long-term buy

Formerly known as Special Steels Ltd, this stock has the makings of a long-term winner. The volumes have shown a very good increase and the price has also shown a tendency to find support just above Rs 23. One may buy the stock at current levels for a target of Rs 59. Keep a stop loss below Rs 23.

Reliance: Buy on breakout

One may buy the stock on breakout above the resistance level of Rs 138 for a target of Rs 150. Keep a stop loss below Rs 133.50.