The budget was the key trigger as the indices which were languishing sideways pre-budget, confirmed an intermediate uptrend as the Sensex closed past its trigger of 16,481 and the Nifty past 4,929.70. The CNX Mid Cap followed suit as it closed above its intermediate uptrend target of 7,378. The Sensex has now been testing its first important resistance zone of 17,000-17,025 which is the falling gap which was formed in the last intermediate downtrend. The Nifty does not exhibit any gap.

The Sensex has moved past this gap on Friday, but was unable to close above this gap. A close past this gap will mean that the indices are headed higher towards the weekly resistance of 17,500 for the Sensex and 5,175 for the Nifty. Above this level, the Sensex has a resistance of 17,800 and the Nifty at 5,316. Once the Sensex registers a close past the weekly resistance of 17,500 and the Nifty past 5,175, the next resistance will be crossed and a new high for the current bull run could be seen in the current intermediate uptrend.

On the weaker side, if the Sensex continues to face a problem at the gap between 17,000-17025, than we could see a minor pull back in the coming week before the indices re-attempt to move past the gap. On the lower side, the Sensex has a support at 16,325 and the Nifty at 4,883. The daily MACD indicator is above its trigger line and as long as this indicator remains in the buy mode, the intermediate uptrend remains intact.

In the last week the Sensex gained 3.44% and the Nifty ended 3.38% higher. The CNX Mid Cap index gained 5.82% and the BSE Small Cap index ended 5.36% higher. All the sectors ended in green and the largest gainer was the BSE Metals index which ended 7.06% higher and was followed by the BSE Realty sector which gained 6.91%. On the weaker side, the BSE IT sector registered a small gain of 1.06% and was followed by the BSE Oil & Gas sector which gained 1.78%.

The targets for the Sensex and the Nifty to drop into an intermediate downtrend are far away and are at 16,074 and 4,805.55 respectively. A minor decline followed by a minor rise will raise these targets. The equivalent target for the CNX Mid Cap index to drop into an intermediate downtrend is at 7,037.20.

The new target for the Sensex to drop into a major downtrend is at 15,652 for the Sensex and 4,675.40 for the Nifty. The equivalent level for the CNX Mid Cap index is at 6,955.60.

The auto-sector is one of the best performer in the current bull run and few stocks are already making new highs even though the indices have yet to do so. Higher levels by the indices will mean more gains for these stocks and I will discuss some of the stocks in this sector today.

Hero Honda is in the new high territory and after consolidating sideways in an ascending triangle, the stock closed past its strong resistance level of 1,800. The weekly MACD indicator for the stock is now in the buy mode and higher levels for the stock will be seen in the current intermediate rise. As the stock has closed past all the weekly resistance levels, the next dynamic monthly resistance is at 2,056. This level will continue to rise as the volatility on the monthly charts improves. Investors must hold on to their long positions and any pull back towards the support of 1,800 can be used by traders to look for long positions.

Bajaj Auto is another stock in the auto two-wheeler segment which is making a new high. The stock is in a strong uptrend on the daily charts while the weekly MACD indicator is still below its trigger line. The weekly resistance for the stock is at 1,944 and a close past this level will result in the weekly MACD giving a buy signal. As the stock has registered a strong rise in the last week, traders must wait for a pull back towards the support of 1,800-1,825 to pick up long positions. Investors must hold on to their long positions with a stop at 1,626, which is the earlier intermediate bottom. Trail this stop as the stock moves higher.

Tata Motors is in a strong intermediate rise and is at the first weekly resistance of 793. A pull back here will give swing traders a good opportunity to look for long positions. The stock is closer to its earlier intermediate top of 844.70, which is likely to be tested soon. The next weekly resistance is at 855.30. As the weekly MACD is below its trigger line, traders must look for profits near the weekly resistance. Investors must hold on to their long positions with a stop at the recent intermediate bottom of 633.

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