Considering the way the price has reacted to the news, it is apparent that well-informed investors were of the opinion that at current levels, the price of the stocks have gone up too far too fast. Once news onthe bonus issue was out, people who had bought the stock at lower levels considered getting out. It is the general public who respects for bonus issues. Thoroughbred speculators are more interested in taking advantage of huge price moves.

Last week, we had been hinting that the index was perilously overbought and the market could see a U-turn. Against the targeted level of 4133 to 4160 points, the index ended up being marginally higher at 4197 before reversing course. The index reversed quite severely in the last two trading sessions of the week. The seeds of a probable decline were sown in on the very first day of the week when the index formed a huge 'hanging man' line on Monday. This was also the second day of the bearish 'Dark Cloud Cover'. This was followed by some sideways price action. The rot started on Thursday when the index fell sharply and the pattern that was formed was the bearish 'Engulfing Pattern'. Two severe bearish patterns were just too much for the index, considering that theindicators were in the overbought zone. The final nail in the coffin was on Friday, when the index witnessed a severe decline. On the weekly charts, the index has formed a 'Spinning Top', a sign of indecision. But considering the overall evidence in the market, the index looks more on the weaker side.

The index should decline to around 3880 points once it breaks below the level of 4000 points. Once the index breaks below the level of 3880 points, it could decline to around 3820 to 3794 points. Once the index declines to this level, we will consider the situation again. If the index manages to creep above the level of 4052 points, we could see that the index could show a bit of a rally. The indicators are in the overbought zone and are declining. The 14-day RSI (Relative Strength Index) is declining from its overbought zone. The MACD (Moving Average Convergence Divergence) line is in the overbought zone but still has not given a sell signal. Nevertheless, the market is expected to show a decline in thecoming weeks.

Shipping Corporation of India

The price of this stock has seen a very good pickup in volumes in the last couple of weeks. The weekly MACD has given a buy signal, but the price has yet to give a good reversal signal. The price faces resistance around Rs 25 and once the price registers a breakout above Rs 25, it can rally to around Rs 45. One may consider buying this stock on breakout above Rs 25. Keep a stop loss below Rs 20.

Raymond

The price of this stock has shown considerable decline from its top. In sympathy with overall market conditions, the price can register a decline to around Rs 85, a strong support level. Price does show a potential to rally to around Rs 170 in the long term. One may consider buying this stock at around Rs 85. This could ac as a reversal point for the price. One may buy this stock on declines. Keep a stop loss below Rs 70.

Century Textiles

This is also one of those stocks that have seen a very sharp rally. The price has failed to rallyabove its resistance level of Rs 55. The price of this stock can decline to around Rs 45 in the short term. One may consider entering this stock around this level. The price of this stock can rally to around Rs 75 in the long term. One may buy this stock on declines. Keep a stop loss below Rs 33.

State Bank

Appearance of a bearish 'Engulfing Pattern' suggests a decline to around Rs 235. Traders may sell short keep a stop loss above Rs 275.

Larsen & Toubro

The price of this stock can decline to around Rs 236 once it breaks below Rs 245. Traders may sell short once it breaks below Rs 245. Keep a stop loss above Rs 252.