The indices paused in the last week after witnessing a nice run up after the budget. This resulted in the indices staying in a narrow range as the Sensex was unable to close past the short term resistance of 17,200 and the Nifty past 5,150. On the last two days, both these indices moved past these short term resistance levels, but dropped lower indicating higher levels was being used by traders and investors to book profits after the nice rise seen after the budget.

The Sensex gained 1.01% in the last week and the Nifty ended 0.95% higher. The CNX Mid Cap index ended 1.08% lower and the BSE Small Cap index ended 0.79% lower. Among the sectors, the CNX IT index was the largest gainer ending 2.01% higher and was followed by the BSE Bankex which gained 1.40%. On the weaker side, the BSE Realty sector was the largest loser ending 2.09% lower and was followed by the BSE Metals index which lost 1.64%.

In the short term, the Sensex has a support at 16,825 and 16,607 and the Nifty has a support at 5,029 and 4,970. After the budget we have seen a one way rise without the indices exhibiting a minor decline and as a result the targets for the Sensex and the Nifty to drop into a fresh intermediate downtrend are far away and are at 16,074 and 4,805.55 respectively. The CNX Mid Cap index is already in a minor decline in the last week and the target for this index to drop into a fresh intermediate downtrend is at 7,037. Once this minor trends ends, the new target will be at the low formed in this minor low. Once the Sensex and the Nifty exhibit a minor decline and are followed by a minor rise, than we will have higher target for the intermediate downtrend for these indices.

On the upper side, the Sensex has a weekly resistance at 17,506 and the Nifty has a weekly resistance at 5,172. A weekly close past these levels will mean higher levels towards the next resistance of 17,833 and 5,329 or even higher. On the other hand, if these indices are unable to close past these weekly resistances and drop into an intermediate downtrend, than it will be bearish.

Few stocks are in the strong intermediate uptrend and few stocks are in the new high territory. Thus, unless we see more sectors and stocks gathering momentum, the current uptrend could fizzle out. With the budget out of the way and we are again following the moves as we see in the other markets around the world, the intermediate trend will again be guided more by the international events and less by the local events.

The IT sector was the best performer in the last week. Majority of the stocks in this sector are in a major uptrend. The intermediate trend of the frontline stocks in this sector is also up, but the weekly indicators are in the sell mode indicating selling pressure at higher levels. I will take a look at some of these stocks and see where position traders can look to book profits.

Infosys remains in a major uptrend and continues to exhibit ascending intermediate tops and bottoms. However, the weekly MACD Histogram has been making lower bottoms indicating that the momentum on the higher side has been on the decline. Under these conditions, the stock will find it difficult to close past the next weekly resistance which is at 2,750. Above this level, the stock has a monthly resistance at 2,894 and this can only be reached if the indices close sharply past their weekly resistance as suggested above. Investors must hold on to their long positions with a stop at 2,329, which is the earlier intermediate bottom.

TCS is also in a strong major uptrend and the relative strength line continues to exhibit rising tops and bottoms indicating that the stock has been outperforming the indices. The weekly MACD Histogram has been exhibiting a negative divergence indicating a loss of momentum at higher levels. The negative divergence does not mean that the stock will top out and begin to decline. It only means a loss of upward momentum which could also lead to a sideways mode for some time before the weekly indicators again signal a buy. The weekly resistance is at 864 where position traders can look for profits. They must use 760 as the stop loss level and must trail the stop as the stock continues to move higher.

Wipro also continues to exhibit a bullish relative strength and has been outperforming the indices in the current major uptrend. The stock is in an intermediate uptrend, but is below its earlier intermediate top of 755.85. Like, TCS, the weekly MACD Histogram has been exhibiting a negative divergence indicating selling pressure at higher levels along with a loss of upward momentum. The weekly resistance to the stock is at 737 where position traders can look for profits in the current intermediate rise.

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