The Hindu Business Line : Consolidation ahead of an upward trend

After a sharp rally in the earlier week, the pattern traced out in the past few days could be classified as a consolidation ahead of the next upward move.

The near-term trend remains bullish and a move to the 2740-2750 range appears likely.

A close above 2760 would help the index move to the next target zone at 2810-2820.

The positive short-term would be valid as long as the support level at the 2630-2640 range remains intact. A close below 2630 would have negative implications and could push the index to the 2540-2550 band. Stop-loss for long positions may be placed 2630.

A close above 2740 would be an early indicator that the index is headed towards the 2810-2820 range. Fresh long positions may be considered at prevailing levels and on declines, with a stop-loss at 2630.

Comments: The market movement was devoid of any directional momentum. The index moved in a zigzag fashion and recorded a gain of about 10 points for the week. Auto and cement sector stocks continued to attract market interest during the week.

Quite a few fundamentally sound mid-cap stocks, too, found buying interest. Prominent gainers from this space include stocks such as Siemens, ABB, Godfrey Philips, Blue Dart and Voltas.

Long-term view: The index appears to be headed towards the 3000-mark in the long-term. This view would be valid as long as the index holds above the long-term negative trigger level of 2300. The positive outlook for quite a few index stocks tends to confirm the long-term bullish outlook for the index.

SENSEX (8961)

The index flirted with the 9000-point mark during the week. Though the Sensex managed to move past this level on quite a few occasions, it failed to close above this psychological barrier. After moving to the target zone of 9020-9050, the trend turned bearish on Friday. The short-term outlook is positive and a move to the 9200-9250 range is likely. This view would be invalidated on a close below 8500.

CNX IT (3640.55)

The outlook remains bullish and the index appears on course to move to the target zone of 3700-3750 mentioned in the recent weeks. Stop-loss for long positions may be placed at 3500. A close below this level would blunt the positive outlook and would warrant closure of long positions. Traders may consider short positions, with a close stop-loss, on the evidence of resistance at the 3740-3750 range.

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