Market may rally

Sensex (19,363.19): The month of November was tumultuous for stock markets across the world.

The Indian markets displayed amazing resilience amid global weakness and the sharp rally on Friday has reinforced the bullish view expressed in recent weeks.

The bullish view and the possibility of a rally to 21,500-22,000 would be intact if the index holds above 18,180.

Else, we could see a test of 16,200-16,300 levels. The long- term positive view would, however, not be affected even if the Sensex were to drop to 16,200-16,300 zone.

Such an event would only delay the eventual progress towards the target zone of 21,500-22,000 and would not negate the positive view.

Going by the chart patterns, there is a fair chance of the rally gathering steam and the Sensex could hit this target zone soon.

The price action in the next few weeks would hold the key and would provide clues about what is in store. Till such time 18180 is not breached, a quick and sharp move to the target zone would be the favoured view.

Nifty (5765.5): After a sharp rally on Monday, the index was confined to a narrow trading zone during the best part of the week.

The sharp spurt on Friday is indicative of the start of the next leg of the rally. A quick and decisive overhaul of the earlier high of 6012 would confirm the resumption of the bullish trend.

The market action during the week has not negated the bullish view featured in the recent weeks. The index is on course to move to the target zone of 6400-6500.

A close above 5775 would be an early sign of strength and a close past 6012 would provide further momentum to the rally.

It would be safer to avoid chasing momentum stocks and investors may look to buy fundamentally sound stocks that have corrected recently.

CNX IT Index (4431): This index has taken a drubbing in the recent months. The fall was arrested at the recent low of 4141 which is just a shade below the crucial 61.8 Fibonacci retracement of the rally from 3193 to 5857.

The bounce from this crucial support zone and the price pattern in the recent weeks indicate that a bottom of some consequence has been established at 4141.

The occurrence of a classic positive divergence between the price action and the 14-day RSI is another factor favouring an uptrend.

The immediate resistance is at 4750-4800 range and the major target cum resistance zone is at 5100-5200.

Short-term support is at 4300-4350. Stop loss for long positions may be placed at 4240. Keep an eye on software biggies as they could move up smartly in the short-term.

Key pivotals:
Sterlite Industries (Rs 1032): This is one of the top performing stocks from the metals space. After a brief correction in the past few weeks, the next leg of the uptrend appears underway.

The outlook is bullish and a move to Rs 1250-1300 appears likely. The bullish view would be valid as long as the support at Rs 876 is not breached. Have a stop loss at Rs 870 for long positions.

DLF (Rs 944): The stock price moved in line with expectations and the sharp rally on Friday indicates that the upward move has gathered momentum.

The share price is on course to move to the target zone of Rs 975-980 mentioned last week. Have a stop loss at Rs 870 for long positions. Long term investors would find opportunities to exit at or beyond Rs 1100.

Wipro (Rs 460): The steady downward move over the recent months has been arrested at the recent low Rs 428.

A classic “double bottom” pattern appears to be in place. The stock could bounce to the immediate target zone at Rs 520-525 range.

An overhaul of this target zone could result in a long term trend reversal and could result in a rally to Rs 625-650. The stock has to sustain above Rs 420 for the bullish view to be in force.

Stock of the week:
Voltas (Rs 241.1): The stock is in a long-term uptrend and appears to be headed towards Rs 275-280 range in the near term.

Long term investors may find exit option at Rs 330-350 levels. The stock may be bought at current levels and weakness with a stop loss at Rs 221.

Though a close below Rs 221 would impart short term weaknesss, it would not negate the long term bullish view. The stock has to close below Rs 192 for the long term bullish view to be invalidated.

Via DNA