The Hindu Business Line : Bullish trend in HDFC Bank

THE stock market sentiment remained firm during the just concluded week. Initially, the old-economy heavy weights provided stability to the benchmark indices while the technology sector donned this role on Friday.

Sensex (2966.6): In line with expectations, the index ruled firm and managed to move above the first resistance level at 2948. Going by the recent price pattern, Sensex is likely to seek higher levels in the near term. A probe of the 3025-3040 range appears to be on the cards.

While the index could seek higher levels, it does not negate long-term bearish outlook. The earlier view of a drop to 2500-2600 range is still valid. The expected short-term rally would qualify as a correction to the overall bearish trend.

The focus this week is on HDFC Bank and LIC Housing Finance. The overall outlook for both the stocks appear positive. Existing holders could remain invested while fresh buying may also be considered by long-term investors who are willing to take delivery.

HDFC Bank (Rs 253.05): The long-term outlook for the scrip appears positive. The stock has significant upside potential from current levels and a move past Rs 300 appears to be a distinct possibility. A move above Rs 260 would be an early indicator of the bullish trend. On the other hand, if the scrip drops below Rs 240, it could drop to the Rs 215-220 mark and the rally to Rs 300 would commence thereafter. Existing investors could remain invested while fresh buying may be considered either on a move past Rs 260 or on a decline to the Rs 215-220 area.

LIC Housing Finance (Rs 80.5): The scrip appears to be headed towards the Rs 90 mark in the near term. Existing holders could remain invested while fresh buying may be considered with a stop loss at Rs 76. A move past Rs 90 could be used to progressively reduce exposures.

Recommendation follow-up

The price movement in HPCL and United Phosphorous was almost in line with last week's expectation. Existing holders of HPCL could book profit while fresh buying may be considered in the case of United Phosphorous.

HPCL (Rs 279.3): After dropping to a low of Rs 267.55, the scrip gained ground towards the close of the week. The overall outlook continues to remain weak with a drop to Rs 240-250 being the preferred view. As of now, only a move above Rs 293 would blunt the bearish outlook. Existing holders could look for opportunities to reduce exposures. A drop below Rs 267 would be an early indicator of a drop to the above-mentioned zone.

United Phosphorous (Rs 142.2): The scrip was confined to a relatively narrow zone during the week. The scrip appears to be poised for a steady up move in the near term. Existing holders could remain invested with a stop loss at Rs 134. A move above Rs 147 could be used to take fresh equity exposures in the company.

(Note: The analysis and opinion expressed in these columns are based on the technical analysis of the past price behaviour. Analysis and price targets are based on the Elliott Wave Analysis. There is a risk of loss in trading)

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