The week saw the initiative taken by the finance minister to preserve the existence of UTI. Nationalised banks as well as the RBI made a commitment to lend funds to the UTI in case of emergency. A cursory look at the top 20 stocks with the UTI in its US-64 scheme reveals the high commitment of the portfolio to commodity stocks which have taken a huge beating in the market.

If UTI has to make a turnaround or rather the US-64 scheme has to break even, the market has to take a complete U-turn. How this is possible under the current circumstances is not readily understandable. Last week, we had anticipated that incase the index breaks below the level of 2,985 points, it could decline to around 2,850 points. On the upside the levels were 3,066 points and 3,150 points. The market broke below the level of 2,985 points and by the end of the week the index showed a decline to around 2,850 points.

On Monday the index formed a long black candle which signified failure of the previous week's `Harami Cross' pattern. In the following two days the index again formed a bullish `Morning star' pattern. This pattern also failed to give a boost to the sagging fortune of the index.

This phenomenon of a series of failures of bullish patterns does not augur well for the market. In addition to this we have seen the market failing to react positively to bullish news. For example, the recent rally in other southeast Asian markets and the Dow Jones have not had the desired impact here. Now a word on the chart patterns. Since mid-June this year, the entire movement of the index can be contained within two converging lines (see chart).What we are seeing is possibly an appearance of a symmetrical triangle with a slight downside tilt. This could be a reversal pattern.

But currently we are in the triangle and the future course of the market depends on the breakout from the triangle. The indicators are showing signs of divergence but a confirmation of a reversal sign is still awaited. The 14-day RSI (Relative Strength Index) is showing signs of a divergence in the oversold region. The 12-day ROC (rate of change not shown here) is in the oversold zone. The index is showing subtle signs of reversal but a confirmation of a reversal on the price is still not seen. Thus, at this juncture it is very difficult to predict the long-term course of the market as we still do not rule out a further decline.

The best option for traders is to trade on actual support and resistance levels. The index can decline to 2,820 points and a break below this level can see the index decline to 2,885 points. Below 2,885 points the index can decline to the lastbastion of support at 2,713 points. On the upside, a break above 2,910 points and the index can advance to 3,066 points.

Dabur: Buy at current levels

This stock has been moving sideways since the last couple of months. Currently, the stock is just above its rising trendline and it is just above its support level of Rs 295. At this level the stock offers a fairly low risk trade. On the upside the stock faces stiff resistance at around Rs 350. If there is a breakout at this level it could still rise to around Rs 390. One may consider buying this stock at current levels. Keep a stop loss below Rs 290.

Onward Technologies: Rally ahead

This stock showed a breakout beyond its resistance level of Rs 82 before reversing from this level. The stock could rise to around Rs 110 if there is a breakout beyond Rs 82. At current levels the stock may show a marginal decline to around Rs 65 before a rally starts. One may consider buying this stock considering a stop loss below the level of Rs60.

Parke Davis: Book profits

This stock was recommended by us at lower levels. Currently, the stock is poised just above its rising trendline and it is showing signs of weakness. The Daily MACD (moving averages convergence divergence not shown here) is in a sell mode. One may consider booking profits if the stock price breaks below Rs 298 as it could decline to even lower levels.

Reliance: Go long

This stock is marginally above the support level of Rs 102.30. Traders may buy long. Keep a stop loss marginally below Rs 102.

Dr Reddy's Labs: Sell short

Traders may wait for the stock to break below Rs 454 before selling short. A break below this level can take the stock to Rs 432. One may sell short. Keep a stop loss above Rs 457.