This was after the fall of 150 odd points in the preceding 90 minutes of trading. In about two hours of hectic trading, the index gained a mind-boggling 200 points. This type of a move occurs very rarely. Either one is in the market at this point or not. Our entire exercise is to determine in which direction the market likely to move. Another point that needs highlighting on the post-budget trading is the effect the load of voluminous trading has on the trading system. Invariably, the due to heavy load of the system, the computer system gets choked resulting in slower execution of trades. After all, the traders could lose a lot if their trades are executed at poor prices just because the system is not geared to fully execute the heavy load. Yashwant Sinha's budget hasput the market on steroids. Our article dated February 13, 1999, had pointed out that what matters in the final analysis is how the market perceives fundamental developments. The popular opinion was that the budget was going to be harsh.

This was already discounted in the price. When the actual fundamentals followed, the popular opinion was that the budget was not harsh as it was made out to be. Once this realisation of 'less harshness' dawned on the market participants, the prices exploded. In our earlier articles, we had cited reasons why the market had decided its course much earlier. If one had the patience to stick it out in bad times, the profit potential could have been immense. Last week, we had expected the index to show a decline to around 3197 points before the market can stage a rally. In the mayhem that followed in the post-budget session, the index made a low of 3215 points before a reversal occurred. The past is dead and gone; lets us now consider how the index is likely to move.

Thepost-budget trading was a long white candle which suggests preponderance of buying power. The following day was also a long candle. The Wednesday's trading was a 'doji' which was followed by a small black candle. The last trading day was also a white candle. The three small bodied candles following the long candles could probably be forming a continuation candle called the 'high price gapping play'. A continuation pattern suggests continuation of the up trend. Now the index has been hovering in a range of 3691 points on the up side to a low of 3563 points. For the confirmation of the up trend, the index has to rally past the resistance level of 3691 points. In case the index fails to rally above the 3691 points and continues to be in a range, the index could decline to a low of 3563 points or to a low of 3525 points. The chance that the index could show a break above the resistance level of 3691 points is higher. On break-out above the level of 3691 points, the index could rally to around 3748points.

Another significant point that needs to be made is that the index has shown a break-out from the formidable resistance level of 3525 points with a huge gap. A break-out from an important resistance level which is accompanied with a gap is a significant development.

The indicators are showing that the uptrend is likely to continue. The 14-day RSI (Relative Strength Index) is just below its overbought level and it has not shown any signs of reversal. The MACD (Moving Averages Convergence Divergence) is in a buy mode. Traders may take long positions on break-out above 3691 points or enter long positions if the index declines to around 3525 points.

HDFC Bank: Buy signal

The finance minister's budget provisions have put a spark back into the banking sector. This stock has seen a sharp spurt in price accompanied by heavy increase in volumes. The price is just below its falling trendline and it is also below its resistance level of Rs 63. The MACD has given a classic buy signal. One mayconsider buying this stock for a targeted price of Rs 81, once it shows a breakout above Rs 65. Keep a stop loss below Rs 60.

Crest Communication: Wait for breakout

The price of this stock is just on the verge of breaking out of its resistance level of Rs 75. The volumes have shown a phenomenal increase in recent times. Once breakout of this level occurs, the price can rally to around Rs 75. One may consider buying this stock on break-out above the resistance level of Rs 75. Keep a stop loss below Rs 60.

Rolta India: Soft targets The finance minister's bonanza for software companies have changed the valuations of software stocks. One may consider buying this stock on break-out above Rs 148. This is a strong resistance level and once this level is surpassed, the price can hit a level of around Rs 200. One may buy on break-out with a stop loss level below Rs 130.

ACC: Go long

Cement stocks have started to pick up. This one has closed just below its resistance level of Rs 1235. Onemay buy the stock on break-out above Rs 1235 for a target of Rs 1285. On break above Rs 1285, the price can rally to around Rs 1372. One may buy with a stop loss below Rs 1214.

Reliance: Buy long

This stock has closed just below Rs 155, a strong resistance level. One may buy on breakout of Rs 155. Keep a stop loss below Rs 150.