The Hindu Business Line : Index Outlook

After a subdued phase during the middle of the week, the trend turned bullish on Friday. The index moved past the target zone at 3250-3260 during the week. After touching a high of 3292, the Nifty closed at 3262.3 on Tuesday and went into a corrective phase in the next couple of trading sessions.

The near-term outlook remains positive and the index appears on course to move to the target zone of 3450-3500 mentioned in the earlier weeks. The short-term target is at 3310-3320. The short-term trend would turn weak on a close below 3220.

As observed in earlier weeks, the long-term positive outlook would be in force as long as the index holds above the bearish trigger level at 3030. A weekly close below 3030 would be an early sign of weakness.

Comments

The market action was lacklustre during the week. Unlike the earlier weeks, not too many prominent stocks managed to find a place in the gainers list. The surge on Friday reinstated positive momentum in quite a few companies, including McDowell, CESC, Praj Industries, SAIL, Goldiam International and Shasun Chemicals.

Considering the quite a few large-cap stocks went through a corrective phase during the week, there is a strong case for the continuation of the positive trend witnessed on Friday. A close above 3293 would impart strength to the upward move. Stop-loss for long positions may be placed at 3220.

Sensex (10950)

The price movement during the week has not negated the positive view featured in the earlier weeks. The index appears on course to move to the next target zone at 11500-11700. It was positive to notice that the index managed to hold above the crucial bearish trigger level at 10760. After hitting a low of 10784, the index staged a recovery since Thursday. A close below 10760 would be an early indicator of a short-term correction.

CNX IT (4209)

The index moved in line with expectations and also almost hit the target zone at 4300-4310 mentioned last week. After touching a high of 4293.5, the index turned weak on Tuesday. The short-term outlook remains positive and the index could move to the target zone at 4300-4310. The positive outlook would be negated on a close below 4140. Stop-loss for long positions may be placed at 4140.

CNX 500 (2821)

The movement in the index was not too different from that of other major indices. The expected short-term correction materialised during the week and this index, too, closed on a firm note on Friday. The recent price action has not negated the earlier view of a rally to the target zone at 2850-2875. A close below 2760 would confirm the short-term bearish phase; a close above 2840 would impart bullish momentum.

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