Nifty is still upward bound; Wipro, United Phos break out

Special to Firstpost

S&P CNX Nifty (5132.30): The sentiment was distinctly bullish during the week gone by. The Nifty is now poised just below the upper end of the trading range at 5,170. A look at the underlying chart patterns indicate that the index is headed towards the next target at 5,400. ( **view chart** )

[caption id=“attachment_108529” align=“alignleft” width=“380” caption=“The Bombay Stock Exchange (BSE) building. Reuters”]  [/caption]

Until the index falls below 4,800, there would be a strong case for a rally to the target of 5,400. While the short-term trend is bullish, the index has to close above the swing high of 5,945 to indicate a reversal of the medium-term bearish trend.

From a trading perspective, long positions may be considered on weakness with a stop-loss at 4,800 and target of 5,400.

BSE Sensex (17082.69): The price action till Friday suggests that the index could register an upside breakout from the current trading range of 15,750-17,220. A breakout past 17,220 could trigger a rally to the major resistance at 18,310.

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As long as the index trades above the bearish trigger level of 16,140, there would be a strong case for a rally to the short-term target of 18,310.

Stocks such as Crompton Greaves, Axis Bank, United Phosphorous, Rural Electrification Corporation, Wipro, Tata Steel and NTPC appear compelling portfolio candidates. Price weakness may be used to pick-up long positions for a gain of about 15-20 percent in a month or two.

The recent swing low recorded in these stocks may be used as stop-loss for the long positions.

Wipro (Rs 363.30): After an extended period of consolidation, the stock registered a breakout on Friday. The short-term outlook is bullish and a rally to the immediate resistance at Rs 376 appears likely. ( **view chart** )

A breakout past Rs 376 would lend further momentum to the uptrend and could trigger a rally to the major resistance at Rs 390. Long positions may be considered on weakness with a stop-loss at Rs 336.

United Phosphorus (Rs 143.95): The stock bounced during the week gone by from the long-term support level of Rs 125. The short-term outlook is positive and the stock could test the immediate resistance at Rs 159.

Long positions may be considered with a stop-loss at Rs 131, for a target of Rs 159.

(The views and recommendations featured in this column are based on a 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.)