Another up week as the indices closed higher and the weekly gap created in the last week by the Sensex between 11,492 and 11,621 remains unfilled. This gap acted as a support to declines in the last week and as the gap is still unfilled, it will act as a strong support to any declines in the coming weeks. The indices gained for the tenth successive week as the Sensex traded in a range between 11,621 and 12,272 and the Nifty stayed in a range between 3,534 and 3,717. They ended near the upper end of the range on Friday and a breakout above 12,272 by the Sensex and 3,717 by the Nifty will mean higher levels to the current intermediate rise. The Sensex has a resistance at 12,280 and a close past this level will result in the Sensex heading towards the next target of 14,000. A close for the Nifty past 3,717 will result in the Nifty heading towards the next target of 4,000 and 4,200 in the next few weeks. On the other hand, if the Sensex drops below 11,550 and the Nifty below 3,520, than the intermediate trend will turn down and these indices will be headed towards the next support of 10,564 and 3,270. Thus traders can keep this in mind and take their positions accordingly. The election results will be out by the time investors and traders read this article. A positive result will mean the continuation of the intermediate uptrend while a negative result will mean a start of an intermediate correction. I have given the breakout and the breakdown range for the Sensex and the Nifty and traders can take up fresh positions accordingly.
The indices improved for the tenth successive week as the Sensex gained 2.50% and the Nifty ended 1.41% higher in the last week. Among the sectors, the BSE Bankex ended 6.13% higher and was followed by the BSE IT index, which gained 4.60%. On the weaker side, the BSE FMCG index was the largest loser ending 1.84% lower and was followed by the BSE Metals index, which lost 0.97%.
The targets for the Sensex and the Nifty to drop into a fresh intermediate downtrend are at 11,621 and 3,534 respectively. The equivalent target for the CNX Mid Cap index to drop into a fresh intermediate downtrend is at 3,952.90.
Many stocks are already at their weekly resistance levels and will have less space to move higher if the indices breakout on the upper side. Few stocks, which are still below their important weekly resistance levels, will be better stocks for traders to pick up long positions. I will discuss a few stocks today in case the indices breakout from their strong resistance zones.
ICICI Bank completed a double bottom formation when the stock closed past its earlier intermediate top of 537.95 and is currently just above the resistance of 558. The stock has also been trading sideways in the last week and a close past 578 along with a breakout by the indices above the resistance levels will result in the stock heading higher. The next resistance to the stock is at 707 and traders can look for long positions in the stock just above 578 with a stop at 548. Trail the stop as the stock and the indices move higher. The target for the stock to drop into a fresh intermediate downtrend is at 548. This level will be raised after the breakout. On the lower side as long as the stock stays above 490, the uptrend remains intact. A close below this level will result in the stock heading towards the support of 400.
Kotak Bank
Kotak Bank is another stock, which is still below its weekly resistance level. The stock is in an intermediate rise and if the indices breakout on the upper side, the stock will be headed towards the weekly resistance level giving traders an opportunity to trade on the long side in this stock. Also, knowing the weekly resistance helps traders to look for profits near this resistance levels. The major trend of the stock has turned up and the stock is headed towards an immediate overhead resistance of 540. A close past this resistance will result in the stock moving towards the weekly resistance of 618. On the lower side, the stock has a support at 423 and as long as this support holds, the intermediate uptrend remains intact.
HDFC
Like most of the stock and the indices, HDFC also closed past its earlier intermediate top in the current intermediate rise and is in a major uptrend. The stock has moved past the first resistance of 1,845 and is headed towards the next resistance of 2,158. The intermediate trend of the stock is up and as long as the stock stays above its support of 1,796, the intermediate uptrend will be intact. Traders can look for long positions above 1,980 for a target of 2,158 in case the indices also breakout.
For more details contact mayur_s@vsnl.com