The Hindu Business Line : Positive outlook still holds steam

Preferred View: Though the index logged a net gain of about 18 points, the market activity was lacklustre. The index was confined to a range and was devoid of any significant momentum. This, however, has not negated the positive outlook; the index appears on course to move to the target zone of 2120-2130. A move above 2090 would impart bullishness.

The positive view is also confirmed by the studies based on Bollinger Bands and the Andrews Pitchfork. The Nifty has taken support at the crucial median line in the Andrews Pitchfork.

A break below this line would have had negative implications. The prevailing value of the median line is placed at 2050. A breach of 2050 could push the Nifty to the lower Median line of the Andrews Pitchfork at 2022.

Comments: With the absence of any major triggers, the market action was relatively dull. Select mid-cap stocks, however, continued to attract market interest. Buying interest was also evident in pharma and banking sector stocks, especially on Friday. None of the large cap stocks, however, attracted any significant buying interest.

Alternative view: Though the move to the target zone of the 2100-2130 range is the preferred view, a drop below the 2005 level would impart weakness and the trend would turn bearish on the breach of this mark.

Sensex (6602.69)

The Sensex closed above the 6600 level on Friday. The near-term trend continues to be bullish. A move past 6620 would confirm the bullish outlook and would strengthen the case for a move to the next target zone of the 6780-6800 band.

Only a drop below the bearish trigger level of 6460 would negate the bullish outlook. The breach of the 6460 level would push the index to 6300-6320 range.

CNX IT Index (2936.9)

Except for a sharp upward move on Friday, the index was range-bound on the remaining days of the week. A move above 2960 would be a positive development while a close above 2980 would push the index to the 3020-3030 range. Stop-loss for long positions may be placed at 2890.

Commodity stocks

The stocks in the sugar and aluminium industry attracted market interest during the week. Prominent gainers include Dhampur Sugar, Bajaj Hindusthan and Andhra Sugar from the sugar sector; Hindalco was a prominent gainer from the aluminium sector. The outlook for aluminium appears positive. A look at the price of aluminium at the London Metal Exchange indicates significant upside potential.

Aluminium ($1965 per tonne): The price of aluminium appears to be headed towards the $2100-2120-per-tonne range at the London Metal Exchange. The positive outlook is likely to have a positive impact on the share price and financial performance of major producers of the metal including Hindalco and National Aluminium.

Hindalco Industries (Rs 1426.8): The outlook for the stock was covered a few weeks ago (edition dated November 14). The stock has already moved closer to the earlier mentioned target zone of 1480-1500. The long-term outlook for the stock is still bullish. The next target is the Rs1600-1620 range. Hold with a stop-loss at Rs 1320.

Sugar: The outlook for sugar price in the international market appears bullish. The technical outlook for quite a few domestic sugar companies appears positive as well. The view on Dhampur Sugar and Andhra Sugar has been covered on earlier occasions. The outlook remains bullish for the two stocks. This week, we take a look at Bajaj Hindusthan.

Bajaj Hindusthan (Rs 116.5): The share price could move to the Rs 135-140 range in the near term. The positive outlook would be valid as long as the price holds above Rs 102. Stay invested with a stop-loss at Rs.102; fresh buying may also be considered on a move past Rs 119, with a stop-loss at Rs 107.

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