Rally-ho! seems to be the cry on the street and none other than the old workhorse Reliance is leading the way. Last week I had speculated that the current rally would last for about five to seven days provided we cross 3220 easily. That looks like a solid resistance level.
I was also anticipating some weakness on Monday and Tuesday, which I suggested were buying opportunities. I suspected there are many buyers waiting to buy the weakness. The weakness was minor and the market almost took out the 3220 at the end of Wednesday and fell back.
However, the way it shot up towards the close of that day after moving sideways throughout the day was an indication of a solid up-move coming.
The next day it opened straightaway at 3233 and crossed 3260 in minutes. Again it stayed at that level for the day barring a minor dip in the afternoon, racing up again towards the end, hitting the next resistance level of 3275 and falling back. The same pattern as Wednesday.
On Friday once again it opened with a gap, and stayed firm throughout the day and moved up towards the close. The rise over the last two weeks was a pre-planned operation by a set of ace speculators.
How far are we headed' Bullishness is rampant and so prices can go anywhere but the rally is maturing.
So, unlike on other occasions when we look at price targets, we will look at a time target this time. The last big rally in the stock market lasted eight weeks, which is the normal span for intermediate rallies.
This time eight weeks will mean the end of the month. I expect it to end before that. No matter what the price tells us, the momentum will flag towards the end of this week. By early next week it may be a time to sell.
A word about the stock that took the market up — Reliance. The last rally was fuelled by Reliance’s gas find. This time no reason is available for a price rise from Rs 260 to Rs 316 though a newspaper did report another gas find — this time in Madhya Pradesh. Reliance Industries will hold its annual general meeting on June 16. Watch out for prices after that. Among the major cheerleaders of this rally were the brothers of two of the biggest scamsters of the Indian stock market (whose exploits I have documented in detail in the book, The Scam, that I co-authored). That’s enough to make us careful.
Besides, when a fierce rally is underway, you will hear all sorts of price targets on the street.
One gem I heard last week was that Himachal Futuristic would hit Rs 1,000. As I said, we will know after the June 16.