In fact, the entire week was active. But the market went bonkers in the last half an hour of Wednesday's trading. On Wednesday, the index crashed with amazing speed. At 3.00 p.m. the BSE index was at 3,695.45 points and at 3.10 the index crashed to 3,618.89 points before recovering to close at 3,688 points. Thus, in a span of 30 minutes the index oscillated by around 140 points.

Such volatility can be a very unnerving experience for traders. Markets do have a tendency to behave most erratically when they are least expected to.

Last week, we had mentioned the importance of the levelof 3,650 points as the crucial determinant of the future direction of the market. It was also mentioned that the index, once it breaks below the 3,650-point level, can decline to 3,563 points and if it stays above 3,650 points it can rally to around 3,800 points.

In the first two sessions of the week the index touched a high of 3,784 points before a decline started. On Friday, the index touched a low of 3,554 points before closing at 3,597 points. On the weekly charts the index has formed a bearish long candle, suggesting that the downward movement may not be completely over. Now notice in the charts that there is a gap between the levels of 3,539 points and 3,563 points.

Friday's low was very close to the level of 3,563 points. Also, the level of 3,525 points is a very strong support level. Thus, the crucial support zone is between 3,525 points and 3,560 points. If the index breaks below the level of 3,525 points, then it is possible that we could see a decline to around 3,400 points. For once the indexhas taken a bit of support at the level of 3,563 points. How long this level holds, remains to be seen.

On the daily charts the two trading days of Tuesday and Wednesday formed the bearish candlestick pattern known as the `engulfing pattern'. A similar pattern was also formed on March 9 and 10. With two bearish engulfing patterns in a span of 15 days, the market looks visibly weak.

The indicators have also shown a bearish tone. The MACD (moving averages convergence divergence) has given a classic bearish sell signal. The 14-day RSI has also dipped at a faster rate. The overall technical position of the market suggests that the index could see a further decline to around 3,400 points once there is a break below 3,525 points. It may be mentioned that the long-term trend remains up. Investors may take decline in stock values as a very good buying opportunity.

Sterlite Industries

A stock that attracts limits for two days in a row is not necessarily bad. Sterlite is a case in point. Our opinion onthis one is on the bullish side. Notice in the chart that the stock is attracting heavy volumes since about two weeks. The price gave a beauty of a break out above Rs 193 only to reverse back. In the short term the price may dip to around Rs 165, this is the right time to buy into this stock. The upside potential in this stock looks substantial. One may buy this stock on declines. Keep a stop loss below Rs 155.

Dr Reddy's Labs

This stock is on the verge of a decline. Holders of this stock may consider booking at least part-profits once it breaks below Rs 827. One decline from Rs 827 the price can decline to around Rs 745 and on break below Rs 745 level it can decline to around Rs 646. One may book profits and consider buying it at lower levels.

KEC International

The price of this stock has shown a break above Rs 31. The price can rally to around Rs 45 and on break above Rs 55 the price can further rally to around Rs 55 one may buy with a stop loss below Rs 30.

TradersChoice:

Glaxo

The price of this stock is just at its support level of Rs 908. One may sell short on break below Rs 908 for a target of Rs 868. Keep a stop loss above Rs 925.

Castrol

The price of this stock can crack badly once it breaks below Rs 820. The price can decline to around Rs 789. One may sell short on break below Rs 820. Keep a stop loss above Rs 830.