Stocks in the software sector also saw some very good increase in price. Last week, a very important and an epoch-making event happened in the stock market history. The BSE formally started trading futures on the BSE Sensex.

This was a very important step taken in improving trading environment of the stock markets. The world over, index based futures form an important part of the trading environment and along with currencies, index based futures attract heaviest volumes and they are very liquid counters. Along with futures, there are also options which help one to limit their losses and maximise gains provided one can use these products wisely.

But again, one may be reminded that these are highly leveraged products and one false move can wipe out anyone's net worth. Past examples of some of the biggest names in the business getting wiped out are Barings Bank and the Orange County in the US. Judicious use of these products can be very useful but extravagant and irresponsible use of these products can be fastest way to the poor house.

Last week, it was expected that the market could see a correction and then it could see a decline. The expected level of selling was pegged at around 4890-4901 points. But in all probability, the market has a bit of steam left and the rally may continue in the early part of the next week.

Now, the price structure of the index is such that the index values are still below the falling trendline. For the next week, the level at which the falling trendline could meet the index values is around 4800 points. The price behaviour of the index in the last two weeks could also be classified as sideways or bound in a range between 4800 to 4485 points. Now interestingly, the 200 day Moving Average of the index is, on the last day of the reading is at 4912 points. Thus now, our overhead resistance level is at 4800-4912 points. The Sensex closed for the week at 4764 points.

There is a good chance that the index could face selling at this level. On the weekly charts, the index has formed a hanging man line suggesting that the market could be going in a range or it may be on the verge of reversal. Also appearance of the pattern, just below the falling trendline does give rise to the fact that the rally in the market may be stalling. Also, the highs of the last two weeks are near 4800-odd points. Thus, the level of 4800 points is also turning out to be a crucial resistance level.

The index could run into selling at higher levels during the forthcoming week. Traders may be well aware that the market could see a correction at higher levels if it fails to move above the level of 4800-4912 points. The index could see a decline if it fails to follow through the resistance level and then it breaks below the level of 4654 points.

Ballarpur Industries
The price has just broken above its previous top of 70.80 points thus making a higher bottom. The price could see a rally to around Rs 100 in the medium term. The price action has seen a very good pickup in volumes and this suggests active buying interest. One may consider buying this stock at current levels for a rally to around Rs 100. Keep a stop loss below Rs 65.

ABB
This stock is steadily rising since a last couple of weeks. The price of this stock may see a rally to around Rs 350 in the medium term. One may consider buying this stock on break above Rs 246 and it may rally to around Rs 350. The MACD (Moving Averages Convergence Divergence) has also given a buy signal.

Escorts
The price of this stock ay rally to around Rs 170 once it breaks above Rs 137. The price ha just seen a break out from its falling trendline and the volumes have picked up a bit. The price may rally once it shows a breakout above Rs 137. One may buy on breakout. Keep a stop loss below Rs 120.

Larsen & Toubro
The price has shown a breakout from a flag pattern. The price may see a quick run to around Rs 235. One may buy this stock at current levels. Keep a stop loss below Rs 214.

Reliance Industries
If the price breaks below Rs 327 there could be a drop to around Rs 311. One may sell short only on break below Rs 327 and Keep a stop loss above Rs 334.

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