Sensex is finally cruising towards the target of 15800 which has been the tgt being repeated many times in the last few weeks. As we see in the chart above 61% retracement level comes to 15800 zone . The 1st trendline breakout has taken place and to a higher side the market can go till 16400 which is the second trendline resistance .
Technically the upside for the current rally is capped arnd 16400 .A breakout move sustaining 16500 would be surprising and i dont expect such a move ! .
For the last few months the view was to buy on dips from 14100 to 12500 in quality large caps and mid caps . We have been advising continously so in the last few weeks and in the previous pull up was recommended to book 50-70 % long term buying done on lower levels. Now at 15800-16400 zone the strategy should be to generate cash !!!!!!!!!!! in the long term portfolio for investors.
Investors stuck in stocks at higher levels can also look to reduce some qty to create cash which can be reshuffled into a better stronger portfolio in dips. In the current pullback our favs RCAP , SBI , BOI , LIC Housing , Tata Chemicals etc etc have been the best perfomers with 50-60 % up from the lows. As part of the disciplined investing its good to book profits and generate cash at this juncture.
Short term traders can continue to trade the momentum in particular stocks as such moves will continue for some more time . As has been presented in the time analysis on Sensex the current phase of pullback should last for 50 days from the low so we could see some sideways move in index with stock specific gains. CHECK http://nooreshtech.blogspot.com/2008/07/sensex-time-analysis-crude-121-123-dow.html .
Stocks to watchout for :
Abg shipyard and Bharti have started bouncing and could do 380-400 and 340 where one can book. Century textiles , Hindalco , SCI look to exit in next 2 sessions. Inox, Patel engg gave a good bounce back, Rajesh exp and bank of mah shud in coming days.
All the const space stocks look good technically for a bounce back in extreme short term .
HDIL ( 502 ) , HCC ( 106 ) , Patel Engg ( 450-454 ) , JP associates( 191 ) are the stocks recommended today to clients for ext short term and small tgts.
Unitech buy arnd 187 stop of 181 for a tgt of 198-210.
DCB if closes above 60 could give a quick 10 % move.
Reliance 2350-2370 is a crucial level which if crossed could lead to a move to 2500 and give markets a good push up.
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