After a month in the grip of bears, key indices and stock prices bounced back on renewed buying last week on the back of a global rally. Equities staged a smart recovery with China touching a new high and South Korea close to touch its peak yet again. While the Sensex is well below its peak, if foreign fund buying in the last two days is any indication to go by, then there is room for optimism.
This week, a string of key data in the US, including new home sales for the month of February, fourth-quarter economic growth and March consumer sentiment, will be in focus.
More significantly, domestic issues such as expiry of derivative contracts and weekly inflation data are likely to dominate sentiments.
Derivative contracts for March will expire on Thursday. However, since the rollover so far is strong, it shouldn’t cause undue volatility on the bourses.
On 23 March (Friday), March Nifty futures traded in a narrow range through the day but closed at a premium of 8.3 points over NSE index, compared with 3.05 points on 22 March. As on Friday the April contracts on a large number of stocks traded at a premium of 0.5%-2.2%. Though there are short positions also, which are being rolled over, given the momentum on bourses and in global markets, this should not pose threat to northward trend.
Looking beyond next week, corporate results are also around the corner and would start pouring in from the first week of the April so a fresh build-up in positions is also likely ahead of these results.
While inflation continues to scare the traders, the current rate of inflation is already discounted and, unless there is a spurt in inflation later when numbers come out on Friday, one shouldn’t see much of an impact.
Technically, the market is likely to extend its gains this week amid intraday volatility. A study of the Bombay Stock Exchange’s benchmark Sensex shows that the market is now coming out of the woods and a close above 13,481 points would confirm that.
Once the Sensex closes above 13,481 points, more gains could be in the offing, which could take the Sensex to its next resistance level of 13,520 points, where there is a moderate resistance level that investors should pay special attention to. That’s because, if the Sensex crosses this level, then the charts point to the next resistance level only coming at 13,803 points, a major resistance point.
However, if the northward momentum remains strong and even this level is also breached, then you can expect levels of 14,328 points.
On its way down, the Sensex is likely to face first support at 13,074 points, following which, the next support is placed at 12,941 points. If the Sensex closes below this level, then it could mean more pain in coming days, as the next support would come up at 12,696 points.
This week, Titan Industries Ltd, Hero Honda Motors Ltd, and GMR Infrastructure Ltd look good on charts.
Titan, which closed Friday at Rs852.60, has resistance at Rs.862, following which there could be a good upward move, which could take it up to Rs917.
The stock has a rock-bottom support at Rs800. Hero Honda, which closed at Rs679.65 on Friday, has strong resistance at Rs705 and, if this is crossed, then there could be a rally in the stock, which could take it up to Rs740. The stock has a strong bottom at Rs630.
GMR Infrastructure is in a consolidation phase and can witness a rally in this week, if it crosses its resistance at Rs383. The stock can move up to Rs398. On its way down, the stock has a good support at Rs358. It closed on Friday at Rs371.75.
In our column last week, the technicals pointed to an upside at Jet Airways India Ltd, then trading at Rs567, with a short-term target of Rs618. Jet Airways touched a high of Rs690, registering a gain of Rs.123 or 21.7% during the week, and closed Friday at Rs631.80, down Rs 35.30, or 5.29%.
Reliance Energy Ltd, was at Rs456 and techicals showed an upside, with a short-term target of Rs492 with the next target of Rs525.
The stock touched a high of Rs498.8 during the week, registering a gain of Rs42.8, or 9.39%, during the week and was trading Friday at Rs486.15.
Hindalco Industries Ltd was mentioned at Rs129.70 with a short-term target of Rs141. The stock touched a high of Rs141.5 registering gains of Rs11.75 or 9.65% during the week before closing Friday at Rs135.55.
Vipul Verma is a Delhi-based investment advisor. Your comments and questions are welcome at email@example.com.