Market rally volatile but bulls remain undisturbed

Special to Firstpost

S&P CNX Nifty (5,359.35): The underlying trend was bearish during the week and the fall was arrested at the support level of 5,200-5,310 mentioned last week. While the recent price action has been marked by a high degree of volatility, underlying bullish fervor remains undisturbed.

The short-term bullish view would not be under threat until the index holds above 5,200. A breach of the major support at 5,000 would cast a shadow in the medium-term bullish view.

Investors may stay put and have a stop-loss at the 5,000 level for long positions. A breach of this level would warrant scaling-down of exposures. With a slew of key events lined-up in the next few weeks, risk-averse investors may take some profits at current levels and wait for the index to breakout past 5,600 to enhance equity exposures.

CNX Bank Index (10,434.30): As highlighted in the chart, the index is perched right at a crucial trendline support. The short-term outlook would be bullish as long as the index holds above this trendline, currently at 10,250.

A fall below 10,070 would be a sign that the index is in the midst of a deeper correction that could extend up to 8,800-9,000 range. Short-term traders may consider long positions with a stop loss at 10,000, for a target of 11,100.

Risk-averse investors may take some profits in the banking sector and consider fresh exposures either on a breakout past 11,300 or on the evidence of support near the 8,800 level.

Exide Industries (Rs.135.65): After a sharp run-up since December 20, the stock has been in a sideways consolidation mode in the past few weeks. The short-term outlook is bullish and the stock could test the immediate resistance at Rs.152.

Long position may be considered with a stop loss at Rs.125, for an initial target of Rs.152. The uptrend would gain momentum on a breakout past Rs 152 and the stock could then target the major resistance at Rs 159.

Arvind (Rs.88.30): The stock, recommended on January 7, hit the target of Rs 90 and has since been in a downward correction. The recent price patterns indicate that the downward correction is over and the next leg of an uptrend is underway.

The stock could rally to the immediate target of Rs 99. Investors may buy the stock with a stop loss at Rs 78. Those willing to play the waiting game may get exit opportunity at Rs110.

(The views and recommendations featured in this column are based on the technical analysis of historical price action. There is a risk of loss in trading. The author may have positions and trading interest in the instruments featured in the column.)