The market crashed to a low of Nifty 4,370 and ended up at 4,517 after a small recovery. The Nifty was down 2.39 per cent week-on-week, while the Sensex lost 2.46 per cent to close at 15,189. The Defty was down 2.77 per cent as the rupee stayed weak.

It was another bearish week and the market hit the lowest levels seen so far in 2008. Volumes were reasonable, except on Friday when they were low. Declines far outnumbered advances.

The Nifty Junior was down 3.18 per cent and the Midcaps-50 was down 1.57 per cent, while the BSE 500 lost 2.37 per cent. The FIIs remained heavy sellers while domestic institutions were token buyers.

Outlook: The market is likely to range between 4,400 and 4,800 in the nine sessions preceding settlement and possibly test both ends of this range. A breakout beyond 4,800 is very unlikely, but if there is a downside break below 4,400, the market could drop till 4,200.

Rationale: The support at 4,400 was tested on several sessions and proved durable. But, resistances exist all the way up to 4,750-4,800. Huge volume expansion would be required to break those resistances and such volume expansion seems unlikely. The downside support is more likely to crack than the upside resistances.

A downside breakout will be quite dangerous given the lack of visible supports below 4,400. There would be a target projection till 4,200 and that is backed by huge outstanding positions in the 4,200p.

Counter-view: Given that index futures are trading at substantial discounts to spot values, the VIX is up and sector breadth is strongly negative, a substantial upside is unlikely. But, we could have big corrective sessions on short covering where the Nifty zooms by 100-plus points. A lot depends on the reversal of FII attitudes – they have sold over Rs 6,000 crore in June.

Bulls & Bears: High inflation and the hike in the repo rate were talking points along with mega-deals like Ranbaxy– Daichi and RCom-MTN. In terms of sectors, real estate was among the worst hit. Banks shares stayed stable following the repo hike after losing ground earlier. Action in this sector may be muted until the rate hike filters through the system.

But, no specific sector did really well and rupee-weakness failed to buoy up the CNX IT.

There was some positive action is fertiliser shares with Nagarjuna Fertiliser, Chambal Fertiliser and GNFC all ending strong. Otherwise, winners such as Aurobindo Pharma, Aban, Bharat Forge, Dr Reddy's, IDFC, etc were scattered and isolated. There was some positive action in telecom shares like RCom, Bharti and Idea Cellular as well as in Spice.

MICRO TECHNICALS

Aban
Current Price: Rs 3,725
Target Price: Rs 3,900

The stock seems to have completed a bullish formation on reasonable volumes. It has a potential target in the Rs 3,900-3,950 zone. Keep a stop at Rs 3,675 and go long. Start taking profits above Rs 3,900.

Bhel
Current Price: Rs 1,557
Target Price: Rs 1,620

The stock has consolidated off a base in the Rs 1,350-1,400 zone. It has the potential to run up till around the Rs 1,600 level before it hits serious resistance. Given decent volumes, it could go till Rs 1,650. Keep a stop at Rs 1,530 and go long.

Chambal Fertilisers
Current Price: Rs 91
Target Price: Rs 98

The stock has shot through a key resistance with strong volumes. It has a probable target of over Rs 100 and a minimum target of Rs 98. Keep a stop at Rs 88 and go long. Book partial profits at Rs 98.

Ranbaxy
Current Price: Rs 566.85
Target Price: Rs 545

The arbitrageurs are calculating all the details of the Daichi offer price and likely acceptance ratios as well as the impact of the issue of new preferential equity. The stock looks likely to settle back at around Rs 545 in the short term. Keep a stop at Rs 570 and go short.

SBI
Current Price: Rs 1,335
Target Price: Rs 1,275

The key banking stock has seen a neutral trend since the repo hike. It looks more likely to settle near support at Rs 1,270 than to break through resistance at 1350. Keep a stop loss at Rs 1,350 and go short. Cover below Rs 1,290.

(The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.)