The intermediate uptrend was reinstated as the indices bounced back smartly from the support of 4,950 for the Nifty and 16,600 for the Sensex. The indices moved past their earlier tops on the intra-day and recovered seven day?s losses in just three trading days. This suggests that the bulls are back in command and once the Sensex closes past 17,500 and the Nifty past 5,200, they are headed higher. On the upper side, the Sensex has a weekly resistance at 17,742, 17,962 and 19,215. The Nifty has a resistance at 5,281, 5,375 and 5,692, respectively.
With the intermediate uptrend reinstated, the targets for the Sensex and the Nifty dropping into an intermediate downtrend are at 16,577 and 4,943.95. These levels are far away and a minor decline followed by a minor rise will raise these targets. The equivalent for the CNX Mid Cap index is at 7,152.15.
In the last week, the Sensex gained 3.83% and the Nifty ended 3.82% higher. Among the sectors, the BSE Metals index was the largest gainer ending 6.83% higher followed by the BSE Oil & Gas index which gained 4.75%. On the weaker side, the BSE Healthcare index was the only loser ending 0.15% lower and the BSE Auto index registered a marginal gain of 1.97%.
The earlier intermediate bottom for the Sensex is at 15,330 and for the Nifty it is at 4,538.50. As long as any correction by these indices ends above these levels, the major uptrend remains intact. The equivalent level for the CNX Mid Cap index is at 6,370.85.
Even though the indices have come very close to their earlier intermediate tops and the Nifty cross the earlier intermediate top on an intra day basis, very few stocks are exhibiting strength and have crossed their earlier intermediate tops. Some of the stocks that did so where from the metals sector. The other sector which turned bullish was the power sector. The power sector has been a laggard and has not participated in the rise in the past few months. Now, it is catching up as traders and investors are picking up some of these stocks. The other sector which has been a laggard is the oil & gas space. There was a rise in the activity in some stocks in this sector.
Few stocks are currently in a trending mode while majority of the stocks are more bound. Traders and investors will have to scan for stocks which are trending and stay in these stocks while avoid stocks which are just drifting in a range. Few stocks in the metals and the realty sector have been trending and trading in these stocks will be profitable. I will discuss some stocks from the construction and realty sector today.
HCC is in a major uptrend but is still well below its major top made in 2008. The stock broke out of the narrow range in which was trading in the past three weeks and this has resulted in a range expansion. The relative strength line is bullish and investors must hold on to their long positions with a stop at 133 which is the recent intermediate bottom. On the weekly charts, the stock has a resistance at 155 and 163 and position traders can look for profits at these levels. Swing traders can look for a pause or a minor decline in the coming days to get into this stock for a target at the weekly resistance levels.
HDIL is also in an intermediate uptrend and is at the first resistance of 366. A close past this resistance by the stock will result in higher levels towards the weekly targets of 392 and 404. The weekly MACD indicator is in the sell mode and has been exhibiting a negative divergence. This suggests that the momentum on the upper side by the stock has been declining and once the targets of the intermediate uptrend are reached, the stock could see selling pressure at higher levels. Investors must keep this in mind and look for profits at the weekly resistance levels. The relative strength line is moderately bullish indicating that the stock is performing in line with the indices.
Nagarjuna Const is also exhibiting a mildly bullish relative strength indicating that the stock has been moving in line with the indices. The major trend of the stock is up, but like HDIL, the weekly relative strength line for the stock has been exhibiting a negative divergence. This suggests that even as the stock is moving higher, the momentum has been declining. Investors must look for profits in such stock near their weekly resistance levels. The stock met with the first resistance on the daily charts on Friday which was at 168.50. Once the stock is able to close past this resistance, the stock will move higher towards the weekly resistance of 179 where investors can also look for profits if the weekly MACD indicator continues to exhibit a negative divergence.
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