The Hindu Business Line : Outlook for Nifty is positive

Preferred view: After having crossed the psychological 3000-point mark in the earlier week, the Nifty managed to consolidate and hold above this level during the week gone by.

It is positive to notice that the index managed to hold at the support zone of 2925-2940 mentioned last week. After touching a low of 2928, the Nifty recovered sharply and recorded a whopping 78-point rally during Monday's trading.

The near-term outlook remains bullish. As observed in earlier weeks, the index appears on course to move to the long-term target zone of 3100-3150. The positive outlook would be negated on a close below 2925.

The overall weakness in the Asian as well as the American markets did not have any impact on the domestic market sentiment. The softening of crude price was the only positive feature from an overall market perspective.

Comments: Though it was a case of a mixed bag as far as the large-cap stocks were concerned, it was the companies from the mid-cap space where the market interest was centred around. Quite a few stocks including Orchid Chemicals, Titan Industries, Bajaj Tempo and Aban Loyd managed to register sharp gains during the week.

Considering that the outlook for quite a few mid-cap stocks is still positive, shareholders may remain invested with a suitable stop-loss in place. Price weakness may also be used to enhance exposures in fundamentally sound mid-cap stocks. As observed in the earlier weeks, we still maintain that a significant correction may be just around the corner. There are already signs of the upward momentum running out of steam in the recent weeks. The index would be pushed to an overbought zone once it enters the 3100-3150 band. Investors need to take profits at every rally, as the anticipated corrective phase could be equally dramatic as the recent rally.

SENSEX (10110)

The just-concluded week turned out to be an eventful one for the Sensex. While the Nifty crossed the 3000 mark a week earlier, the Sensex moved past the coveted 10000 mark on Monday. The index has moved right into the target zone of 10100-10200 mentioned in the earlier weeks.

Though the near-term outlook appears positive, we expect a corrective phase to commence sooner than later. Though there is no case to press the panic button as yet, a dose of caution would be in order for investors.

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