The Hindu Business Line : Firm trend likely in the Nifty

Preferred View: The market action was in line with the view indicated last week. The trend turned positive after a test of the 2070-2080 range. Except on Thursday, the index managed to close on a firm note. The Nifty also managed to stage a bounce back by the end of the trading session on Friday, after being confined to lower levels during the day.

The near-term trend remains bullish and the Nifty appears on course to move the target zone of 2185-2190. The positive view would be valid as long as the index holds above the immediate support level at the 2070-2080 range. Holders of long positions may have a stop-loss at 2070. A close above 2135 would impart further strength and would confirm the possibility of a rally to the target zone.

Comment: Reliance Industries was the star performer of the week among the Nifty stocks. The stock moved past the Rs 600-mark during the week on expectation of a settlement between the Ambani brothers. Technology sector stocks, too, ruled firm, with Infosys,Wipro and Satyam recording gains during the week. The rally in the Nifty would have been more pronounced had there been support from old-economy stocks.

SENSEX (6906.5)

Preferred view: The expected short-term weakness did not materialise last week. The correction turned out to be short-lived with the index staging a sharp recovery on Monday after dropping to a low of 6757. The overall trend continues to be bullish and the index has already moved to the target zone of 6900-6950 that has been mentioned in the earlier weeks.

The short-term trend is positive and the Sensex could move to the 7050-7100 range. The positive outlook for quite a few index stocks, including Infosys and Reliance, supports the positive outlook for the index. The bullish outlook would be negated if the Sensex closes below 6600.

Comments: The upward trend in the price of crude oil is a cause of concern. The uncertainty pertaining to the price hike of petroleum products in the domestic market cloud affect the market sentiment in the following week. With the quarterly performance of the corporate sector scheduled to trickle-in, the market movement could be subject to a high degree of volatility. Investors need to tighten the stop-loss and take profits on every rally.

CNX IT (2953.3)

The movement in the index was devoid of any momentum during the week. This has, however, not negated the view of a rally to the 3050-3100 range. A close above 2970 would impart strength and confirm the possibility of a rally to this zone. Holders of long positions may have a stop-loss at 2850. A drop below this level would impart weakness and also negate the short-term positive outlook.

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