• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

B. Krishnakumar

Nifty (1996.2)

Preferred view: The market sentiment continued to be distinctly positive during the just-concluded week. The much-anticipated correction remains elusive. Technically, the move past the crucial resistance levels of 1913 and 1936 imparted bullishness. The recent price patterns indicate that the Nifty could seek higher levels.

A move past the immediate resistance level and the historic high of 2014 would impart further strength. A close above 2014 may result in the index nudging the 2100-mark. From a slightly longer-term perspective, it appears that the index may be in the final leg of an upward move. The implications are that a significant correction may be just round the corner.

A drop below 1960 would be an early indictor of the onset of a corrective phase; a decline below 1840 would confirm that the index is in a corrective phase of a bigger order. For the moment, a continuation of the recent rally is the preferred view.

Though there are quite a few pointers that suggest that index may well be in the final stages of at least the current leg of the rally, it is always better to wait for a confirmation in terms of a drop below a critical trigger level. Till such time, it would be safer to remain invested with a suitable stop-loss. Conservative investors may think in terms of taking partial profits.

Comments: The recovery in the price of Reliance Industries along with emergence of buying interest in banking and oil sector stocks boosted market sentiment. This, along with the sustained inflow of FII funds, helped the Nifty edge past the 2000-point mark in intra-day trades during the week.

The index, however, could not manage to close above this level. The divergence between the key indicators and the corresponding price chart continues to be a cause of concern. Despite the index moving closer to the historic high of 2014.65, the 14-day RSI is still a shade lower than those levels. Such a bearish divergence is evident in the weekly charts, too. Though such a divergence does not necessarily result in an immediate correction, it has proved to be a reliable tool that has often captured price reversals.

Sensex (6322.76)

It was an historic week for the BSE Sensex. Unlike the Nifty, the Sensex managed to move past its earlier all-time high. Not only did the index move past the all-time high, it also managed to hold ground and close above this level.

The near-term trend continues to be bullish. In a trending market, it would always be safer to stay with the main trend, which is positive in the case of Sensex and Nifty. While periodical profit booking may be in order, it is not time yet to initiate short positions. Investors need to get into an alert mode and take partial profits in stocks that have run up significantly.

Comments: Unlike the trend witnessed in earlier weeks, the market action during the just-concluded week was concentrated in large-cap stocks. Mid-caps went into a corrective mode and quite a few of them had to surrender a portion of the earlier gains. The outlook for a few frontline index stocks remains bullish. This supports the short-term positive view for the key indices.

S&P CNX IT (2914.65)

The index managed to move past the target zone of 2950-2960. The near-term outlook does not appear bullish. A drop below 2860 would be an early indicator of the onset of weak trend. At the moment, a close above 3015 would be needed before any meaningful uptrend could take shape.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Rane (Madras): Reject

Copyright © 2004, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line