Technically speaking, no one had dreamed of such a sharp rally on ITC counter, at least not in this fashion. Although such a sharp rally took everyone by surprise, if it is not a bluff, then market position has certainly improved.

The move becomes much more positive as the Sensex has bounced back from a crucial level of 2741 points. During this week, the Sensex has tested this level twice and did not fall below this level. As a result of Friday's 45 points gain, the Sensex recorded a weekly gain of 66 points. The impact of this gain has been positive on oscillators (21-day RSI, 14-day and the medium term MACD). All these oscillators have moved above the triggerline, besides giving a positive divergence which isconsidered as a bullish signal.

The future course of the market would entirely depend of ITC's move. If it manages to remain above Rs 700 on Monday, the market may gain further strength as other counter will have no option, but to follow ITC trend. Had ITC remained stagnant on Friday, other counters would have definitely recorded some loss. Sentiment on ITC counter helped other counters to post marginal gains.

While ITC will be the deciding factor, the short-term outlook for other key counters like Hindustan Lever, State Bank, Bajaj Auto, Telco, Tisco, and Reliance has also improved. Reliance is on a strong wicket unless it dips below Rs 109.50. Bajaj Auto is also firm and might record some more gains on Monday. While Bhel is better placed for Monday trading, Hindalco looks attractive. It is expected to record some gains in the next two days. But if it fails to do so, the outlook may turn negative for the stock.

Overall, the market direction would be determined by ITC. And if ITC remains firm, counterslike Bhel, Dabur, Glaxo, Ingersoll Rand, Knoll Pharma, Parke Davis, Reckitt & Colman, Voltas and Raymond appear attractive for long position.

But if ITC fails to remain above Rs 700, it would mean a lower Sensex. And in that scenario, short position can be taken on counters like Carrier Aircon, Corporation Bank, GE Shipping, GTB, HDFC Bank, IDBI, Lakme, and Phillips.