The indices continued their rise in the last week, but the Sensex faced a strong resistance at the 17,052 level and the Nifty at 5,060. These indices have not been able to close past the strong resistance, even though they did manage to move past these levels on an intra-day basis. Now, the Sensex will have to close past the recent minor high of 17,099 and the Nifty past 5,079.30 to confirm an intermediate uptrend. The CNX Mid Cap index is already in an intermediate uptrend and will have to close below 6,370.45 to drop into an intermediate downtrend.

In the coming week, if the Sensex and the Nifty confirm an intermediate uptrend and move past their respective targets, than the Sensex will be heading towards the next target of 17,400, 17,450 and 17,860. The Nifty will head towards the target of 5,170 and 5,305. On the other hand, if the indices are unable to move past their respective intermediate uptrend targets, and drop below Friday’s low of 16,635 for the Sensex and 4,932 for the Nifty, then the Sensex will be heading towards the supports of 16,495, 16,000 and 15,587, while the Nifty will be heading towards the supports of 4,895, 4,750 and 4,615.

In the last week, we saw a rise in volatility and this was due to the movements in the Dollar Index. Since March, the Dollar Index has been in a sustained decline and the stock and the commodity markets around the world have been zooming. Now, we are seeing that the Dollar Index has been getting a good support at the 75 level and if we see some improvement in this index, then markets around the world will decline. All the markets are currently inversely co-related to the Dollar Index. Hence, the moves in the stock markets are guided by the movements of the Dollar Index.

Most of the indices ended in green, as the Sensex gained 1.03% and the Nifty gained 1.07%. Among the sectors, the BSE Metals index gained 3.57% and was followed by the BSE Auto index, which gained 2.16%. On the weaker side, the BSE Reality index ended 1.11% lower and was followed by the BSE Power sector, which lost 0.05%.

The earlier intermediate bottom for the Sensex is at 14,684 and for the Nifty, it is at 4,353.45. As long as the indices stay above this level in the next intermediate correction, the major uptrend remains intact. The equivalent level for the CNX Mid Cap index is at 6,370.85.

The banking sector was very active on Friday and this sector could rise further. Most of the stocks in this sector are already in an intermediate uptrend and if there are no negative news from the overseas markets and the Dollar Index remains subdued, then this sector is likely to improve further and swing traders and position traders can look for long positions. I will now take a look at a few stocks in this sector.

ORIENTAL BANK is in a major uptrend and has been so for a while. It has also been exhibiting ascending intermediate tops and bottoms. As the relative strength is bullish, the stock has been outperforming the indices and investors must hold on to their long positions with a stop at 234. This is the earlier intermediate bottom as the stock moves higher. On the daily and weekly charts, the stock has a resistance at 300 and swing traders can look for profits at this level if the current rally by the indices continues. Swing traders and position traders must keep a stop at 270 for the long positions that they hold.

Banking stocks have seen a strong performance in the current major uptrend and ALLAHABAD BANK is no exception. The stock is closer to its earlier major top of 143.20 and may soon test this top and close past it. The stock has been exhibiting a bullish relative strength, indicating that the stock is outperforming the indices. Swing traders and position traders must look for profits at the earlier major top as this level will act as a resistance. They can again pick up long positions if the stock registers a strong close past this resistance level. Also, check the trading volume if this happens. Investors must continue to hold on to their long positions with a stop at 111. Trail this stop as the stock moves higher. The stop for traders is at 129.

CANARA BANK is in an intermediate uptrend, but has been exhibiting volatile moves in the past few weeks. The stock has been swinging between 321 and 396 and the intermediate trend could be defined as sideways instead of up. Traders can look for profits at the upper end of this range and look for longs at the lower end of the range. A close past 400 with strong volumes will result in the stock moving higher towards the next resistance of 421, which is the earlier major top. Investors must hold on to their long positions with a stop at 320.

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