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B. Krishnakumar

NIFTY (1373)

Preferred view: The overall outlook continues to remain positive. The index appears well on course to move to the upper end of the target zone of 1400-1450. The index could eventually move towards the 1500 mark within the next few weeks.

Evidence of the reversal of the recent uptrend is yet to surface. Given this backdrop, it would be better to hold long positions. Price declines could be viewed as an opportunity to take exposures with a close stop loss. Only a close below 1240 would warrant a re-look at the current bullish outlook. In this kind of bull market, it would be a profitable strategy to employ a trailing stop loss (placed a few ticks below the low recorded a couple of trading sessions ago) to participate in the rally.

Periodical profit-booking for a portion of the portfolio is considered to be an effective money management technique. Risk-averse investors could book profit for a portion of the portfolio and deploy a trailing stop loss to protect unrealised gains.

Comments: As anticipated, the index ruled firm last week. After a sharp decline on Wednesday, the index recouped lost territory in the remaining two trading days. As of now, a drop below 1340 would be an early indicator of the onset of a short-term correction, while a drop below 1240 would be a threat to the overall bullish outlook.

A series of negative divergence is visible in the 14-day Relative Strength Index. This indicates that a short-term correction may be round the corner. This, however, does not necessarily indicate that the index is headed for a sharp slide. As witnessed in earlier weeks, the uptrend can resume after a brief sideways action.

Alternate View: Though the market continues to exhibit unusual strength, it still does not rule out the possibility of a retracement towards the earlier major low of 849. Only a move past 1550 would almost negate this possibility and would be a strong indicator that the market is in a new bull orbit.

SENSEX (4369)

Preferred view: As anticipated in earlier weeks, the index managed to move to the target zone of 4350-4400. Except for a sharp slide on Wednesday, the index managed to rule firm in the remaining days of the week. The overall outlook continues to remain bullish. Only a drop below 4200 would push the Sensex into a corrective phase.

Comments: The technical indicators still do not provide any indication of the reversal of the uptrend. Only a close below 4150 would warrant a reassessment of the bullish outlook.

S&P CNX 500 (1128)

Preferred View: The movement in this index was in line with other major indices. After a sharp drop on Wednesday, this index too managed to recover lost ground. The index appears on course to move past the target zone of 1140-1150.

Comments: The overall outlook for the index appears positive. The long-term target for this index is placed at the 1350-1400 range. A few stocks from the pharma sector ruled firm. The outlook for quite a few large and mid-cap stocks appears to be positive. This confirms the possibility of a rally to the projected range of 1350-1400.

CNX IT Index (16713)

Preferred View: After a steady downtrend, the index has displayed some signs of bullishness in the recent weeks. The surge in the price of key technology stocks in the past few days has imparted bullish trend in the IT index. As a result, a move towards the immediate target level of 19000 appears to be on the cards.

The positive outlook for stocks such as Infosys, Satyam, HCL Technologies, Polaris, I-Flex and NIIT confirms the possibility of a further upmove in this index. Long positions in the index could be held on with a close stop loss.

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