The Hindu Business Line : Near-term outlook turns positive

Preferred view: Except for the weakness on Monday, the market sentiment remained distinctly positive during the remaining four days of the week. The index managed to hold above the support level at 2300. It also managed to close above the positive trigger level of 2410.

As a result, the near-term trend has turned positive. There is an intermediate resistance at the 2330-2340 range.

A close above 2440 would confirm the positive outlook and help the index move to the target zone of the 2490-2500 range. The price pattern traced out by the Nifty indicates that each wave of the upward move has been extended.

This type of a market action typically occurs in the midst of a strong trend.

Unless there is an indication to the contrary, it would be prudent to hold long positions in such a market. Investors, however, need to have protective stop-loss at a comfortable level to guard against unexpected turn of events.

There is a series of key support levels for the Nifty. It appears unlikely that Nifty would breach key support levels at the 2330-2340 range.

A break of this level would pave the way for a drop to the next support level at the 2300-2305 range. Only a close below 2300 would negate the positive outlook.

Comments: Concerns relating the impact of soaring crude oil price affected market sentiment on Monday. Though the price of crude continues to hover within a striking range of the $70-per-barrel mark, the market sentiment turned positive after the fall on Monday.

We continue to favour the long-term bullish outlook. FII appetite for Indian stocks appears unsatiated. The price pattern suggests that the influx of liquidity would continue to drive Indian equity indices to new highs.

As observed in earlier weeks, the long-term bullish view remains intact.

The index appears to be on course to move to the target zone of the 2550-2600 range. Investors may consider fresh exposures as and when fresh "buy" signals are triggered.

SENSEX (7899.8)

Preferred view: Unlike the Nifty, the Sensex failed to move past the positive trigger level of 7950. The near-term trend, however, appears positive.

A close above 7950 would confirm the positive view and would help the index move to the target zone of 8080-8100. A close below 7530 would have bearish implications.

CNX IT (3208.1)

The index managed to close above the crucial resistance zone at the 3100-3110 range. As anticipated, this imparted a positive trend and the index touched a high of 3244 on Friday.

The near-term outlook is positive and a move to the 3285-3290 range appears likely. The positive view would be negated only on a close below 3100.

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