The indices are in an intermediate uptrend, but the rate of rise by the indices has been slow as the Sensex has been staying between 14,016 and 14,955 in the past twelve trading sessions and the Nifty is staying between 4,143 and 4,440. A move out of this range will result in a strong move on any side and this could happen after the budget. The target of the Sensex to drop into a fresh intermediate downtrend is at 14,355 and for the Nifty it is at 4,249.70. The equivalent level for the CNX Mid Cap index is at 5,360.70.
The earlier intermediate top for the Sensex is at 15,600.30 and for the Nifty it is at 4,693.20. These levels will have to be crossed in the current intermediate rise if the major uptrend has to remain intact. The earlier intermediate bottom for the Sensex is at 14,016.95 and for the Nifty it is at 4,143.25. A fall below these levels will result in the major trend turning down. The equivalent level for the CNX Mid Cap index to drop into a major downtrend is at 5,157.55.
In the last week, the Sensex gained 1.01% and the Nifty ended 1.11% higher. The CNX Mid Cap index ended 0.48% higher. Among the sectors, the BSE Consumer Durables ended 3.61% higher and was followed by the BSE Metals index, which gained 3.40%. On the weaker side, the BSE IT sector ended 1.42% and the BSE Auto sector lost 1.24%.
Except for the Chinese stock markets, all the other markets around the world are on the verge of dropping into an intermediate downtrend or are in an intermediate downtrend. Thus, unless we have a very good budget, our markets could also follow the other markets around the world and start correcting. Also, as the earlier intermediate bottoms for the indices are near, the major uptrend will also be threatened. On the bullish side, there are less expectations and a low build up ahead of the budget. This could mean that any positive surprises could result in a strong up move and higher levels for the indices.
Though the intermediate trend is up for the indices, few stocks are in an intermediate uptrend. The rate of rise by the indices has been lower and this has resulted in the indices remaining in a range. A move out of the range will result in a strong trend and traders and investors must look for moves in the direction of the trend. Wait for the budget to end and look in which direction the indices settle. Take a position in the direction of that move.
The electrical equipment sector, which is also in the large engineering and equipment sector, could be the beneficiary of any policy decision by the government as regards to big infrastructure projects. Some of the stocks in this sector have been consolidating near their earlier intermediate tops and a close above this sideways consolidation in the coming week will result in a strong move. However, position traders and investors must wait for the breakout with strong volumes to get into the stock. This could happen after the budget. I will take a look at some of these stocks today.
Siemens has been consolidating at the highs after witnessing a strong rise since March. The stock has been staying above its 30 WMA and a close past its earlier intermediate top of 528 with a strong surge in trading volumes suggest higher levels for the stock. This can happen just after the budget and investors and traders can look for positions in the stock. On the other hand, if the budget does not have positive surprises, than a drop below 448 could result in the stock pulling back towards its 30 WMA. Currently, the intermediate trend is sideways and a move out of the range will give a good trend in the direction of the breakout.
BEL
BEL is also in a major uptrend like the indices and most of the stocks. Like most of the stocks in this sector, BEL has been trading between 1,254 and 1,469 since the past seven weeks. A move out of this range will result in a nice trending mode, which position traders and investors can utilise. Wait for a breakout above 1,470 with a strong surge in trading volumes, and look for long positions. On the upper side, the BEL has a resistance at 1,800 where position traders can look for profits. Do not pick long positions in the stock in anticipation of the breakout.
Crompton
Crompton has made a nice base between December 2008 and March 2009 and is in a major uptrend. Like most of the stocks in this sector, Crompton is trading sideways for the past few weeks and a move out of the range will result in a trend. This could happen just after the budget and will provide position traders and investors to look for long positions. A move above 312 with strong volumes can be used to pick up long positions. On the other hand, a drop below 263 will result in a pull back towards the 30 WMA.
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