Monday 24 September 2007

Nifty seen on course for fresh high

We saw a ‘bullish engulfing candle’ for the Nifty on Tuesday, which was a strong candlestick pattern for an upward move for the market. This was mainly due to the surge in major indices on Wednesday and robust gains on Friday. The Nifty ended the week at 4,837, its highest-ever closing, and a gain of 7% over the previous week.

It has been gaining for the past five consecutive weeks. Market breadth was negative on Friday, but it was positive for most part of the week. BSE Realty, BSE Oil & Gas and BSE Bankex indices were among the prominent gainers during the week.

Market ahead

Last week’s upmove was backed by strong volumes, and we expect the market to build on these gains in the coming days. This week, the Nifty is expected to consolidate in the 4,850-4,900 band. We also expect a major up-move for the market beyond 4,950 and touch 5,000 levels in the short term.

Sectoral Indices

BSE Oil & Gas (9,340): The BSE Oil & Gas index had broken past the crucial resistance level of 8,200 about three weeks ago, and has been on the uptrend ever since. On a weekly closing basis, the index has been on an uptrend for six weeks in a row. It was also helped by the buoyant trend in the international oil market. We expect this index to touch 9,750 levels in the short term. Petronet LNG and Gail are our favourite stocks.

BSE Bankex (8,740)

The BSE Bankex has closed at 8,740 level last week, and is now quoting at an all-time high. We expect this index to touch 9,000 levels in the short term. Kotak Bank and Oriental Bank of Commerce are our favourite stocks in this sector.

SBI: After being restricted in the Rs 1,400 to Rs 1,750 range for the past three months, we saw SBI breaking out of that range on Friday. The stock ended the week at Rs 1,808. We recommend a ‘buy’ on SBI in the Rs 1,800 to Rs 1,820 band, with a target of Rs 1,935. Investors should fix their stop loss in this stock at Rs 1,760.

BSE Realty (9,183)

The BSE Realty Sector closed at 9,183 levels last week, and is now quoting at an all-time high. This sector rose above its key resistance level of 8,500 supported by strong volumes. We expect this index to touch 9,500 levels in the short term. Indiabulls Real Estate and Purvankara are the best bets in this sector.

Akruti Nirman: The stock has broken above its key resistance level of Rs 705, supported by strong volumes. We recommend a ‘buy’ in the Rs 745-750 range with a price target of Rs 835 and keeping a stop loss at Rs 720.

DS Kulkarni Developers: The stock has broken above its key resistance level of Rs 260, supported by strong volumes. We recommend ‘buy’ in the Rs 272-275 range, with a price target of Rs 302 and keeping a stop loss at Rs 258.

- Reliance Money