On Friday, the BSE Sensex closed at 3523.44 points, showing a net loss of 45 points compared with the previous week's close. The week experienced volatile market movements wherein the index fluctuated in a wide trading range of around 150 points. The political developments taking place in the country dampened the mood of market participants. This was further compounded by fears of rupee devaluation. The fate of the Gujral Government hangs on tenterhook as it depends on Congress supremo Sitaram Kesri.

Almost everyone has started talking about mid-term polls as a distinct possibility. Such instability is not good for the long-term prosperity of the country. In the previous week, it was mentioned that the index had formed a bullish Harami Cross pattern and the index should stage a small rally. In fact, this view was reinforced with the appearance of a white candle which confirmed the pattern.

The market lost some ground in the Tuesday's trading session and in the next two sessions, it staged a reversal of sorts. On Wednesday, the index opened with a gap and then lost heavily, only to make a significant gain at close. This session formed a classic Hammer. The next day, the index opened at the low of the previous session and then rallied significantly. The combined effect of both the days formed a pattern called Tweezers Bottom. Friday's trading session was a strong white candle; Friday's session also closed the gap at 3510 points.

On the weekly charts (not shown here), the index has formed a Star with a very long lower shadow.

If the index stages a gain, it could form a pattern known as the Morning Star -- a bullish pattern. The indicators are in the oversold zone and it is for the first time that an actual buy signal has been given.

The 14-day RSI (Relative Strength Index) has started to move up from its oversold zone. Similarly, the 12 day ROC (Rate of Change) has moved up from its oversold zone. However, the MACD (Moving Averages Convergence Divergence) is yet to signal a buy. Both the weekly and the daily charts have formed bullish patterns and the market should gather strength in the coming weeks. At the most, there may be a slight delay in the uptrend and the index could oscillate in the range of 3800-3390 points. If the index breaks below 3390, it should stabilise at around 3315 points. Long-term investors should can buy selectively at current levels.

Satyam Computers: Good potential

The stock has shown a correction from its recent high of Rs 197. Last week, the stock showed a smart rally accompanied by good increase in volumes. This is in a middle of a long term uptrend and the indicators are showing long-term bullishness. The 14-week RSI has started moving up from its equilibrium level. Investors may consider buying into this stock at current levels for a decent appreciation. Keep a stop loss below Rs 135.

Nedungadi Bank: May rise

This lesser-known stock has announced good results. Earlier, the stock had formed a `Hammer' which was followed by a long white candle. The weekly MACD has given a buy signal. This stock faces resistance at Rs 57. Await breakout beyond this level before buying into it. Keep a stop loss below Rs 45.

ACC: Bullish

The stock has remained more or less unaffected by the downfall that has affected the general health of the market. Since the past four weeks, the stock has been moving in a very small range and the volumes have been low. This suggests accumulation. Also, the stock is currently poised at its rising trendline. The right time to enter into this stock is when it starts to move beyond Rs 1200. If it does, it could go up to Rs 15 50. One may consider holding this as a forward trade. Keep a stop loss below Rs 1150.

Castrol: Buy long

Castrol has closed above Rs 642 -- a crucial short term resistance level. The stock could rise up to Rs 700 in the short-term. Traders may buy. Keep a stop loss below Rs 640.

Telco: May rise

Telco has risen above its support level of Rs 320. Recently, volumes in the counter have improved. Traders may buy. The stock could rise up to to around Rs 340. Keep a stop loss below Rs 320.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.