Users of petrol are already paying through the nose, thus there is not much scope for the rise in the prices of petrol. This means that the prices of diesel and other petroleum products like kerosene and LNG will be increased. Last week, we were looking for the index to break below the level of 5341 points. The index was unusually choppy during the week, as the market continued to be volatile. A severe drop in the values of commodity stocks influenced the drop in the values of the index.

In the latter part of the week, the software stocks also saw some heavy selling in price. The index went below the low it made on the day of the budget and the index closed below the support level of 5330 points. This is again a bearish sign for the market. On the weekly chart, the index has again formed a long black candle. This is again a bearish sign for the market. On the daily charts, the index has also formed a long black candle this is also a bearish sign.

During the week, the index has seen a typical behaviour as the market shows a tendency to open higher during the day and then there is a huge sell-off later on. Also, the movements of the index are not contained within a well-defined range but they are more of a sideways movements within a falling channel (see chart). Now, the width of this channel is of about 500 points and therefore, for the market to give a buy signal, it has to break above the level of 5740 points. Compared to the close of Friday, this is a good 450 points away. On the daily charts, notice that the index has broken below the rising trendline giving a sell signal. If the market breaks below the low of 5127 points, then we might see that the market declining to a low of around 4950 points. This is a very crucial juncture for the market.

The level of 5127 points is a very crucial support level and if the index breaks below this level, there could be a further deterioration in value. But at the same time, the level of around 5127 points is a crucial support level, strong enough to reverse the current intermediate downtrend. The indicators are showing signs of weakness. On the weekly charts the MACD (Moving Averages Convergence Divergence) has given a sell signal. The daily RSI (Relative Strength Index) is just below its equilibrium level. It is very difficult to decide or rather say for sure how the index is likely to behave in the next week.

At times, the market is not really showing signs of how it is going to behave in future. The only thing that can be said is if the index breaks below 5127 points there could be a decline to around 4950 points. But if the index holds above this level, then there is a good chance that the market may rally again.

NIIT
The price of this stock is showing a tendency to move within a band of Rs 2203 to Rs 3200 since past year or so. In last two weeks, the price of the stock has not deteriorated heavily, though there was severe selling in the market. The price of the stock may rally to around Rs 3200 in the medium- term. One may consider buying this stock on break above Rs 2600 for an appreciation to around Rs 3200 in the medium term. If the price breaks above Rs 3200, then there is a chance that it may rally to around Rs 3800. One may buy with a stop loss below Rs 2200.

Cipla
The price of this stock has reversed from the 61.80 retracement level of the entire rise from Rs 220 to Rs 1800. The price may see a rally to around Rs 1300, once it breaks above the Rs 975. One may buy the stock at current levels. Keep a stop loss below Rs 870.

IDBI
The price has just broken out of a long trading range. There could be a decline to around Rs 47-50 in the next couple of days. This will be the ideal time to buy this stock. The price can rally to around Rs 75 in the medium term. One may buy this stock on declines. Keep a stop loss below Rs 42.

HDFC Bank: Sell short
The price may see a decline if it breaks below the level of Rs 255. Traders may sell short this stock for a possible downside target of Rs 225. Keep a stop loss above Rs 267.

Mahindra & Mahindra: Enter long
The price of this stock may see a rally to around Rs 415 once the price manages to break above Rs 370. One may buy long on break above Rs 370 for the target of Rs 415. Keep a stop loss below Rs 350.