Earlier, stocks in the pharma, IT and the FMCG sector were among top gainers. But now, the rally is spreading to the cement and the auto sectors. Once the auto sector gathers momentum, the auto ancillary sector will follow. There is nothing happening in terms of any policy changes, as the current government has no powers for the same.

The maxim no news is good news seems to be working here. With no policy decisions coming out of anywhere, the questions of debating on the policies does not arise. The current government is almost non-functional, there are almost no policy changes that are announced. This gives an aura of stability to existing policies. Last week, we expected that the market was likely to encounter support at the level of 4463 to 4500 points.

The best part of the rally was the speed with which the market was gaining ground. Nowadays, if the index is rallying by a 100- odd points or if the rally makes a couple of higher closes in a row, it is quite possible that the some individual stocks may register fantastic gains over a couple of days. One should always be on a look-out for stocks that are going to show a sharp rally over a next couple of days.

The index has been going in a sideways trend over last three weeks or so. If one notices closely, it is seen that the decline from the high of 4810 points can contained in two downsloping trendlines. This sort of price movement follows a strong uptrend. The pattern we are trying to identify here is the 'flag pattern'. This is a continuation pattern suggesting continuation of the uptrend. The basic requirements of the pattern are met and upon breakout, from the pattern the index could see a sharp rally.

The basic point of break out is difficult to determine here. This is because due to the slope of the line, the point of breakout will tend to change with the change in time. But we can definitely form an opinion on the basis of the past action. The crucial point of the breakout is the level of 4650 points. Once this level is exceeded, the market may rally to higher levels.

Also notice the appearance of the flag pattern, it is exactly at the level at which the index value rising trendline (See chart). This increases the odds that the breakout will be on the upside. This week's price action resulted in appearance of a 'doji'. This indicates indecision. But the trading days of Wednesday and Thursday resulted in a strong white candle.

The index has a strong support at 4545 points. If there is a break below the levels of 4545 points the index could decline to around 4570 points. There is a chance that the level of 4545 points will hold. And the rally will gather momentum once the level of 4650 points is decisively penetrated. One may consider buying selected stocks at current levels.

The MACD (Moving Averages Convergence Divergence) is still in a sell mode and it has by itself not given any buy signal. The 14-day RSI (Relative Strength Index) is near its equilibrium level. It is expected that the market may rally from current levels. One may consider making purchases at current levels.

Silverline Industries

The price has broken out from its rounding bottom suggesting a reversal of the downtrend. The price has seen a very violent down move in the past. The chance now is that it can see a very violent move on the upside. The price of the stock can rally to around Rs 400 in the medium term. The price has already registered a break out from the resistance level of Rs 241. One may consider buying this stock at current levels for a targeted price of Rs 365. Keep a stop loss below Rs 241.

Kakatiya Cement

The price of this stock has registered a breakout from the level of Rs 30, a strong resistance level. The breakout has been on a tremendous increase in volumes. The price of the stock may see a rally to around Rs 33, which is a strong resistance level. Once this level is surpassed, the price could see a rally to around Rs 255. One may buy the stock at current levels for a decent increase in price. Keep a stop loss below Rs 24.

Corporation Bank

The price of this stock has broken above its resistance level denoted by a falling trendline. Currently, the price of the stock is moving in a narrow range. The price of the stock may show a rally once it breaks above the level of Rs 105. On break out, the stock price could rally to around Rs 130. One may buy this stock with a stop loss below Rs 98.

ACC: Enter long

The price of the stock seems to be in for a smart rally. Traders may consider buying this stock for a target of around Rs 255. Keep a stop loss below Rs 228.

Tisco: Good buy

The price of this stock is just above the support level of Rs 129, which is a strong support level. At current levels, the stock appears to be low risk buy. One may consider buying this stock at current levels. With a stop loss below Rs 128.