The markets rallied for the third straight day post Budget. The major indices - the Sensex and Nifty have closed above their short- and medium-term averages, and momentum oscillators have now entered overbought zones, hence some consolidation is warranted at current levels.

The Sensex yesterday regained the 17,000-mark, after January 21, 2010. Some of the laggards like Reliance, realty and oil marketing companies joined in the rally on Wednesday.

The index may now face resistance around 17,090-17,145, while seek support around 16,910-16,855. The current up move is unlikely to end in a hurry, and we may see the Sensex move in a trading band of 16,620-17,465 for most part of this month.

The NSE Nifty ended with a gain of 71 points at 5,088. The index may face resistance around 5,118-5,137, while find support around 5,058-5,040.

Grasim
Outlook: Positive
Last Close: Rs 2,753
Target: Rs 2,795
Support: 2,735

Grasim yesterday closed with a gain of 1.3% at Rs 2,753. The stock has kind off underperformed in the current Budget rally. One may see the stock do some catching up. The daily and weekly charts both are in bullish mode. One can look to buy the stock with a stop of Rs 2,735, for a target of Rs 2,795.

Larsen & Toubro
Outlook: Negative
Last Close: Rs 1,576
Stop Loss: Rs 1,590
Target: Rs 1,555

Larsen & Toubro is in declining mode on the momentum oscillators. The stock had recently recovered sharply after breaking its long-term moving averages. The stock is likely to face stiff resistance around Rs 1,590. One can short the stock with the said stop, for a target of Rs 1,555.

Tata Motors
Outlook: Profit taking likely
Last Close: Rs 808
Stop Loss: Rs 818
Target: Rs 765

Repeating Tata Motors, just because yesterday the stock did face some resistance at higher levels, but did not correct much. The momentum oscillators are showing signs of tiring, hence some profit taking seems due at the counter. Look for a shorting opportunity, with a strict stop at Rs 818, and target of Rs 765. Initial target could be around Rs 775.

Disclosure: The author does not have any financial interest in the above stocks.