The Hindu Business Line : Near-term outlook remains bullish

The immediate target for the index is placed at the 2590-2600 range. Though it is still not advisable to book profits in a hurry, a fair dose of caution would be in order.

A close below 2450 would be an early sign of weakness.

Investors may sell a portion of their long positions on a breach of the 2450-point mark.

A weekly close below 2300 would be a conclusive sign of reversal of the bullish trend. This would also mark the start of a relatively prolonged corrective phase. Stop-loss for a portion of the long positions may be placed at 2450 and at 2300 for the balance.

Comments: Market activity was quite robust during the week. It was interesting to notice that the set of stocks that drove the index to new highs this week was different from that of the previous week. Such a move is a healthy sign.

Apart from the action in the large-cap and index stocks, the activity in the mid-cap space also gathered momentum.

Quite a few mid-cap counters saw sharp rise on the back of a pick-up in volume as well.

Notable gainers include Asian Electronics, McDowell, Sesa Goa, Star Paper and Orient Paper.

The price pattern traced out by quite a few stocks suggest that there is signficiant upside potential even after the recent spurt.

Based on the long-term price charts, we are particularly bullish on stocks such as Sesa Goa, Monsanto Chemicals, MRF, Opto Circuits, India Glycols, Corporation Bank, IPCL, VSNL and IPCA Labs.

Investors may use price weakness to accumulate these stocks with an appropriate stop loss in place.

SENSEX (8380.9)

Preferred View: The index ruled strong and also managed to hold above the bearish trigger level of 7950. The near-term outlook is positive and a move to the 8500-8550 range appears likely.

Taking into account the strong rally witnessed over the past few weeks, investors need to turn cautious as a reversal in trend could be equally sharp. A drop below 8050 would be an early sign of weakness and would warrant dilution of long positions.

CNX IT (3284.6)

The index moved in line with expectations and also touched the target zone of the 3285-3290 range.

The near-term trend is positive and a move to the 3330-3340 range appears likely. It would require a close below 3200 to blunt the positive view.

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