But the fall was faster. The index lost a total of more than 625 points from the high of 4322 points to the low of 3590 points in a matter of 24 trading sessions. With the market turning volatile the bulls would have had a torrid time.

On June 1, 1998 the budget for the year will be presented and all eyes will be watching it closely. There have been several statements from responsible sources that the budget for the year will be harsh. What is popularly believed is that the there is going to be an across the board increase in the customs duty. If this comes true then stocks of companies reeling from low customs duty will benefit. The fact that economy is in a bad shape is aforegone conclusion. What will now be of more interest is how the government plans to tackle the problem of diminishing rate of growth.

Last week, we had expected the market to rally but the move of the market was exactly reverse of what was expected. The fall in the index values was so sudden and unexpected that it caught us completely on the wrong foot. If the speed with which the market collapsed was awesome the recovery was even more so. This is the most fascinating part of the stock market. In terms of the Elliot wave count the entire down move from 4322 to the low of 3589 points can be termed as the "Double zigzag" pattern. This pattern is a rarity. The index made a low of 3590 points before a strong recovery was seen. The level of 3590 points is exactly 61.8 per cent retracement from the low of 3164 points to the high of 4322 points. The point that the market has reversed direction from such a crucial level bears a significant impact on the future course of the market. The analysis in terms ofJapanese suggest that the Friday's trading session was a "near doji". A signal to be considered significant as it has occurred above the level of an important support level.

Also the just below the low of 3590 points there is a "window" or a gap. Windows in candlesticks are considered to be as potential support levels. Also Friday's trading session opened with a gap. This was the third day in a row that the index opened with a gap. A third gap is usually considered to be a reversal sign.

On the weekly charts there is a long black candlestick following previous weeks "harami cross" pattern. As yet no clear signs of a reversal in trend are seen. For this to happen it is necessary that the index should first close above the level of 3750 points and also the falling trendline has to be penetrated.

The indicators are giving mixed signals. The 12-day ROC (Rate of Change) has formed an inverse head and shoulder pattern and is showing signs of positive divergence. The 14-day RSI (Relative Strength Index) hasnot given a buy signal yet. Also the MACD (Moving Averages Convergence Divergence) has not yet given a buy signal.

In the final analysis the confirmation of a reversal signal is yet to occur. It is too early to say that the market has changed its course. We expect the market to stage a recovery towards 3750 levels and once the index manages to rise beyond 3870 points we may expect the market to further gather strength.

Pentafour Products: growth candidate

Following closely behind the steps of its more boisterous brother this stock also shows the potential to appreciate. The stock has shown a break out beyond its significant resistance level of Rs 22 accompanied by an appreciable increase in volumes. The 12- week ROC shows a strong momentum. The stock does show a potential to rise to around Rs 55 in the medium term. One may consider buying at current levels. Keep a stop loss below Rs 20.

Tisco: On the rise

The stock has recorded a big "hammer" in the current week's trading. Also thesupport level of Rs 145 has held forth in the face of some heavy selling pressure. The stock does seem to have a potential to rise beyond Rs 230 in the medium term. One may consider buying this stock at current levels. Keep a stop loss below the level of Rs 145.

Nagarjuna Fertilisers: Enter now

This stock has shown a breakout beyond the level of Rs 20 accompanied by a very strong increase in volumes. Since the breakout the stock has again descended to this level. This is an excellent chance for someone to enter at current levels. The stock does show a potential to rise to around Rs 40. One may consider buying at current levels. Keep a stop loss level below Rs 15.

Hindustan Lever: Go long

The Friday's trading session in this stock was a "doji". Since last couple of weeks this stock has been hovering in a range of Rs 1560- 1690. Currently the stock is in the lower end of the range. Traders' may consider buying at current levels for a target of around Rs 1690. Keep a stop loss below Rs1590.

BHEL: Sell short

This stock is slightly above its support level of Rs 353. Traders may sell short if and only if this level is broken. Keep a stop loss above Rs 360.