The market registered net gains but with perceptible resistance and lower momentum. The Nifty closed out the week at 4509.5 points for a rise of 1.01 per cent. The Sensex was up 1.77 per cent and closed at 15590.42 points.

The Defty rose 1.69 per cent as the rupee strengthened yet again. Both FIIs and domestic mutual funds were stable buyers through the week and the market cap hit a new high.

Breadth indicators weakened on Friday with a lower advances:declines ratio. Volume was moderate throughout the week. Most of the losses came in small-caps and secondary mid-caps.

The BSE 500 gained 2.27 per cent and the Nifty Junior also outperformed bigger indices with 2.10 per cent gain. The Bank Nifty was a major driver gaining 2.5 per cent and the CNX IT gained 1.1 per cent despite the strong rupee.

Outlook: There was resistance evident between Nifty 4500-4550 levels on Friday. This will probably translate into a small correction or a consolidation. There is support at 4450 and again at 4400. On the upside, intra-day high could hit the 4600 mark but prices above 4565 are unlikely to be sustainable.

Rationale: The market is clearly in an intermediate uptrend so there will be support just below current levels. But it’s not clear yet if the long-term bull market is in perfect health. Ideally, one would like to see a new all-time high (Nifty 4650-plus) in the next 10 sessions.

The trading patterns towards the end of last week suggest operators were booking profits in mega-caps and rotating into mid-caps. Retail players are not that active at the moment so, small-caps are underperforming.

Counter-view: There are several strong reasons to presume that the big bull market is alive and well. One is that the correction that started in late July bottomed at 4000 level, at the support of the benchmark 200 day moving average.

A correction that doesn’t penetrate the 200 DMA is unlikely to presage a bear market. Another reason is that the recovery has been quite broad though there hasn’t been as much volume expansion as one would like. This has of course, resulted in record market cap numbers being registered. On balance, new record highs seem much more likely than a big crash.

Bulls & Bears: A pattern of consolidation or correction is visible across the CNX 100 universe (Nifty and Nifty Junior). But some specific stocks rose sharply. The finance sector did well especially housing finance stocks such as HDFC and LIC Housing. Upside projections look good in stocks such as Jet Airways, Sun Pharma, Grasim, HDFC Bank, Hero Honda and ITC.

MICRO TECHNICALS

Jet Airways
Current price: Rs 902.75
Target price: Rs 955

The stock has seen massive buying in the past three sessions. However, there is formidable resistance between Rs 955-1000. The stock is likely to penetrate into that zone and then bounce up and down, inside a wide trading range. Keep a stop at Rs 885 and go long. Expect abnormally high volatility.

LIC Housing
Current price: Rs 213.95
Target price: Rs 230

There has been a strong rally in the stock and it cleared a key resistance on excellent volumes on Friday. The upside target would be about Rs 230. But the gap at Rs 210-213 is likely to be filled as well. Keep a stop at Rs 205 and go long. Cover above Rs 225.

Punj Lloyd
Current price: Rs 305
Target price: Rs 330, Rs 355 (long-term)

The stock has jumped to new levels on the back of a volume expansion. The short-term target is likely to be about Rs 330.

The intermediate target (three weeks) could be Rs 355-360. Keep a stop at Rs 295 and go long. Cover partially at Rs 330.

Reliance Energy
Current price: Rs 850.4
Target price: Rs 820

The stock has run into a correction with a drastic drop in volume. This is likely to translate into a fall till support at about the Rs 820 level. Keep a stop at Rs 860 and go short. Cover at Rs 820.

Sun Pharma
Current price: Rs 1010.85
Target price: Rs 985-1070 (Range trading)

Sun Pharma jumped with a gap on a volume expansion on Friday. It’s likely to move till around the Rs 1070-level but there will also be a lot of intra-day selling. Expect very high volatility with prices ranging between Rs 985-1070. Keep a stop at Rs 985 and go long. Cover and go short (“double-minus”) at above Rs 1050.