The market has been able to weather the relentless selling by foreign institutional investors (FIIs) as most of the sales have been absorbed by the domestic institutions and local investors. The widely held view that domestic institutions will not be able to sustain the market for long has proved to be wrong.

Barring a small decline, the level of 2,800 points has been sustained. The Indian stock markets have been able to withstand most of the bad news that have heard in recent times. One has not seen signs of distress sales for some time now. The market seems to have become immune to bad news, as the worst has been discounted at current prices.

At lower levels, the market always finds eager buyers. This is the strength of the Indian market. Even smallinvestors are likely to put in their savings in a stock like Reliance or State Bank of India with the hope that the market will improve in future.

During the week, the Tatas decided to pull out of their proposed airline project. The project was delayed for over three years during which four governments took steps to initiate the project. The endless bureaucratic bungling has ensured that the customers have lost a chance to get a good airline which would have been catered to their needs.

Last week, we had anticipated that the market is likely to remain undecided for the week. The index showed a declining trend earlier, but showed some strength towards the end of the week. We have been expecting the market to show some recovery. Considering the technical evidence available, it is likely that the market should gather strength in the coming weeks.

The first sign of a reversal came when the index formed a `Doji' just above the level of 2,837 points during Tuesday's trading. This was followed by a `hammer'.On Thursday, the index formed a long white candle. This confirmed the bullishness in the market. On the weekly charts (not shown here), the current week formed a white candle which has again confirmed the previous week's hammer.

In terms of conventional charting theory, the index, once it shows a breakout beyond the level of 3,040 points, would confirm a double bottom. In terms of the Elliot wave count, the level of 2,850 points marks the culmination of the entire downtrend from 3,525 points. The uptrend that is now expected to unfold should take the index to around 3,350 points.

The indicators are showing bullishness. The 14-day RSI (Relative Strength Index) has shown a breakout from its inverse head-and-shoulder pattern. The MACD (Moving Averages Convergence Divergence) has given a buy signal. As the market is expected to rise traders may consider remaining on the long side of the market.

Essel Packaging: Buy at current levels

During the week the stock formed a long white candle, suggestingbullishness in the stock. The volumes have also shown a discernible rise. The stock has been struggling to go past the level of Rs 155 for some time now, and finally managed to break the barrier during the week. On the daily charts (not shown here), the MACD has given a buy signal. The stock is expected to rise to around Rs 225 in the medium term. One may consider buying the stock at current levels. Keep a stop loss below Rs 135.

BHEL: Medium-term buy

This scrip has shown a breakout beyond the level of Rs 235, a strong resistance level, and in the process the stock has formed a double bottom pattern. In the medium term the stock is expected to rise beyond Rs 280. One may consider buying this stock. Keep a stop loss below Rs 225.

Rhone-Poulenc: May rise

This stock is marginally below its resistance level of Rs 545. Once the stock shows a breakout beyond this level it is expected to rise to around Rs 650. One may consider buying this stock once it registers a breakout beyond the level of545. Keep a stop loss below Rs 525.