The values of the index and the stock prices went into a free fall. It is doubtful if there were many short positions because the manner in which the market crashed would not have allowed many people to enter on the short side of the market. On Thursday, the index crashed by more than 125 points in the last half-hour of trading.

The string of events in Kargil caused a panic of sorts in the market. It has been noticed on several occasions in the past, when the market in a free flowing bull run has been stymied by the news of conflict on the border. One certainly hopes that there is a quick end to the tension at the border. With the economy in such a bad state, thelast thing we need is a war at this time.

Last week, we had expected that the market should decline. We expected that the index could decline to around 3,800 points once it breaks below the level of 3,888 points. Our opinion was again against the popular opinion.

Market action proved us right. Sceptics will say that it was the news of a possible war that created the sell-off. But for us, it was, this news has acted as a catalyst to the inevitable. The best thing was, it merely accelerated the process. This week, the index began on bullish note, but the rally was not convincing as both days were with small real bodies.

Also note how both the candles were contained within the range of prior long candle.Wednesday was a long black candle. This pattern of four candle was the 'rising three methods', a continuation pattern, suggesting that the pattern suggested resumption of the downtrend. The Friday's trading was again interesting. It was almost like a hammer, but an upper shadow suggests that this patternwas a 'star'. Considering what has happened, it is possible that virtually anything is possible from here in the following week. Usually after a star, the price action could go in a trading range.

The index could go in a range between 3,888 to 3,675 for some time before the index decides on its future course of action. This is the most likely course of the index over next one or two weeks. At the same time, we do not rule out further decline in the price.

In case the index breaks below the level of 3,659, it is still possible for the index to decline to around 3516 points or still lower to around 3400 points. On the upper side, the index faces heavy resistance around 3,888 points. The index could rally to higher levels. We usually offer only a single view on the market. But circumstances indicate that the index could do any sort of jugglery from here on. For the time being, we will have to do with what we have.

The indicators are in a bearish mode. The daily MACD (Moving Averages ConvergenceDivergence) has given a sell signal. The 14-day RSI (Relative Strength Index) has declined below its equilibrium level. Considering the available evidence, it is likely that the index could go in a range of 3,888 points to 3,675 points. Do not rule out a decline if the index breaks below 3,659 points.

Kesoram Industries

This stock has seen a very good pick-up in volumes over last couple of weeks. One may note in the charts that the price managed to wriggle above the support of Rs 15.30 and went on to reach out to its higher resistance level of Rs 23.5. Currently, the price is just below this resistance level, and it is expected that once this level is surpassed, the price could rally to around Rs 42 in the medium term. One may consider buying this stock around Rs 17.50. That is, on declines to around or on breakout above Rs 23.5. If one buys around Rs 17.50, one may have to wait for some time as there could be some protracted sideways movement. If one buys on breakout, the move above Rs 23.5 couldbe fast. One may buy with a stop loss below Rs 15.5.

Ashok Leyland

The price of this stock is just below the resistance level of Rs 62. In fact, during the week, the price just touched this level before declining a bit. One may consider buying this stock once the price registers a breakout above Rs 62. On break above this level, the price could rally to around Rs 90. One may buy on breakout. Keep a stop loss below Rs 58.

Voltas

The protracted sideways price action in the last four weeks or so suggests accumulation. Currently, the price is just above the support level of Rs 80. One may consider buying this stock at current levels for a decent appreciation in the price over the long term. Keep a stop loss below Rs 77.

NIIT

The price of the stock could see a rally to around Rs 1894 in the short term. One may buy with a stop loss below Rs 1790.

Dr Reddy's Laboratories

The price of this stock has broken below Rs 825 a strong support level. One may sell short the stock atcurrent levels for a target of Rs 755. Keep a stop loss above Rs 830.