The market saw some slide on the downside and the rally in the market was short lived. The main commodities stocks were badly hammered and there was no respite in the selling. In the end it was the turn of Hindustan Lever to come under a barrage of selling pressure. Hind Lever and several other stocks in the commodity sector made their 52-week lows.

The increase in the prices of oil had a weakening impact on the market, the index. But what matters is how the market is going to take the hike in the price of petroleum. If the increase in the prices of oil is less than expectations, the market should have discounted the impact of the increase in the prices of oil. After all it is amply clear to everybody that the market should decline on the face of an increase in the price of oil. It is obvious that if once there is a hike in the price of oil then the market will decline. But the market has a mind of its own and what is obvious is not necessarily true.

Last week we were looking at the support zone of 3967-4050 points. This week the index was within the support of 3967-4050 points and this support was not violated. The index has formed a small-bodied candle for the week and this suggests that there is indecision in the market. The low of the index during the week was marginally below the low of the previous week or rather it is very near to the low of the previous week.

This pattern is the `tweezers bottom'. On the daily charts the index formed a bullish engulfing pattern on Wednesday after which the index went in a range. The market is well within the support of 3967-4050 points and appearance of bullish candlestick patterns does point towards reversal of the trend. We also know that the index has formed a huge symmetrical triangle and after the index broke below the triangle it has not shown a heavy decline, as one would normally expect once a triangle is broken.

Now notice in the chart that the index has formed a gap between 4257 and 4208 when the market opened with a down gap last Friday. Now if the market reverses any time during the next week, the index opens with a gap on the upside, with a gap between 1208 and 4257 points it means that the market has formed an island reversal pattern indicating that the market could turn bullish.

The supporting indicators are in the over sold zone. The 8-day Relative Strength Index (RSI) is in the oversold zone. The Moving Averages Convergence Divergence (MACD) is not yet showing any major signs of reversal and it is below its trigger line. The trend of the market is sideways between and the market till the time a clear trend will take place in the direction of the breakout. If the index breaks below the level of 3967 points then expect a decline to 3800 points. But if there is a break above the level of 4257 points expect a fairly rapid movement on the upside. By Monday the things on the market will be clear and it will be amply clear which direction we should be taking.

Hindustan Lever
The price of this stock is just near its 52-week low and it is just above its support level of Rs 203. If the price reverses from this level there could be a rally to around Rs 240 if the support of 203 holds. The risk of a downside is relatively low and if the market reverses from this level there is a good chance that the price will reverse. One may buy this stock at current levels and put a stop below Rs 200.

HDFC Bank
The price formed a very strong candle on Friday and rally in the price was accompanied by a spurt in volumes. The price has just broken above its falling trendline and it has signalled a reversal of the trendline. The price of this stock could see a rally to around Rs 286 over a medium term.

One may buy the stock at current levels and keep a stop loss below Rs 220.

ITC Ltd
The price of this stock is marginally above its support level of Rs 703. One Friday the price formed a `harami cross' pattern. This is a reversal pattern and it suggests that the price may reverse. The price may see a rally to around Rs 950 if the support at Rs 703 holds. One may buy the stock on break above Rs 740 and keep a stop below Rs 700.

Infosys Technologies
The price of this stock is likely to see a rally to around Rs 7,589 and once the price breaks above the level of Rs 7,589 there could be a rally to around Rs 7,900 and keep a stop loss below Rs 7,305 points.

Cipla
The price has been stiff resistance at the level of Rs 700 a since last couple of days. The price of this stock may see a rally to around Rs 775 once the price breaks above the level of Rs 700. One may buy on break above Rs 700 and keep a stop loss below Rs 668.

(The writer's e-mail address is shahmani1@yahoo.com)