Though the last week was truncated, the indices saw a strong bounce back as stock markets around the world bounced back after they were quite oversold. This forced the short sellers to cover their shorts as the indices have moved closer to their respective intermediate uptrend trigger values. In the medium term, the Sensex took a support just above the last and important support of 8,000 and the Nifty took a support at the 2,500 level. A drop below these levels would have resulted in the free fall as there were no supports except the lows attained in October.

The Sensex is closer to the intermediate uptrend target of 8,998.31 and the Nifty is near its target of 2,798. A close past these levels will confirm a start of an intermediate rally. The equivalent target for the CNX Mid Cap index to get back into an intermediate uptrend is at 3,234. In the past week, a few stocks have gone into a fresh intermediate uptrend and once more stocks get back into an intermediate uptrend, a rally will be confirmed. The earlier intermediate top for the Sensex and the Nifty are at 9,725 and 2,970 respectively. Once the intermediate rally is confirmed, these indices will have to move past the earlier intermediate tops in a lesser time to confirm a start of a major uptrend. The equivalent level for the CNX Mid Cap index to get back into a major uptrend is at 3,978.

In the last week, the Sensex gained 5.17% and the Nifty ended 3.78% higher. Among the sectors, the largest gainer was the BSE Metals index, which ended 7.24% higher and was followed by the BSE Auto index, which gained 6.81%. On the weaker side, the BSE Consumer Durable index was the largest loser ending 1.08% lower and was followed by the BSE Healthcare index, which ended marginally higher gaining 0.75%.

On the upper side, the Sensex has a resistance at the 8,875 level and the Nifty at 2,750 levels. These indices will first have to close past these levels before we can see higher levels. On the weekly charts, the Sensex has a resistance at 9,260 and the Nifty has a resistance at 2,820. These indices will have to close past these levels before they can move higher towards their earlier intermediate tops.

Currently, the speed of the rise in the past two trading sessions has been strong and I would like to see the momentum in the coming week. A strong momentum of the rise will decide between a rally and the start of a major uptrend. Today, I will take a look at metals, which are poised to move higher if the indices confirm an intermediate uptrend. Traders can look for long positions in some of these stocks.

SAIL

SAIL has been exhibiting descending intermediate tops and bottoms since January and is in a major downtrend. The intermediate trend of the stock turned up after the stock exhibited ascending minor tops and closed past the earlier minor top of 78. The stock has a resistance at 90.50 and 93.25, where traders must look for profits in the current intermediate rise. Only a close past 93.25 will mean higher levels. The earlier intermediate top for the stock is at 92.25 and a close above this level will confirm a major uptrend for the stock. Use minor pull backs in the coming week to look for long trading positions in the stock. Investors must stay away for more time till the indices and more stocks confirm a major uptrend.

Jindal Steel & Power

Jindal Steel & Power is exhibiting a short-term relative strength and is moving in a rising channel. The resistance on the upper side is at 1,160 and only a close above this level will mean higher levels and more gains for the stock. Support exists at 900 and as long as the stock stays above this support, higher levels can be expected. The intermediate trend of the stock has turned up and traders can look for long positions with a first target of 1,160. Keep a stop at 9,81 for this long position.

TISCO

TISCO will confirm an intermediate uptrend once the stock closes past its earlier minor top of 174.90. The relative strength line for the stock is still weak and investors must stay away from the stock as of now. The stock has a resistance at 188.50 and only a move above this level will take the stock towards the next target of 236. Traders must first look for profits at the first resistance of 188.50 and only after the stock is able to close past this level, they can again look for long positions. This will only happen if the indices are able to move swiftly above their earlier intermediate tops in the rally.

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