The Hindu Business Line : Index Outlook

A bullish trend prevailed as anticipated last week. The index cruised past the first target zone of 3310-3320. It appears on course to move to the next target zone at 3450-3500 mentioned in the recent weeks.

There is a strong support at 3370-3380. The short-term trend would remain positive as long as the index holds above this support zone. A close below this zone would only delay the progress towards the target zone and would not negate the possibility of such an event happening. Only a close below 3220 would impart a long-term corrective trend.

Comments

After a lacklustre activity in the earlier week, the bullish trend regained momentum during the week gone by. Quite a few mid-cap stocks attracted market interest this week. Prominent gainers include Rajesh Exports, Asian Electronics, SRF and Kirloskar Oil Engines.

After a corrective phase, stocks from the sugar and pharma sector attracted market attention during the week. Almost all frontline sugar companies posted a sharp rise in their share price. The spurt in the price of sugar in the international market appears to have triggered the rally. The recent price action indicates that the sugar stocks still have upside potential.

Sensex (11280)

The price movement during the week was in line with expectations. A positive trend prevailed and the index closed past the 11000 mark during the week. The Sensex also shot into limelight after having overtaken the Dow Jones Industrial Average.

The index appears on course to move to the next target zone at 11500-11700. The positive trend would be in force as long as the index holds above 10780. A close below this would impart short-term weakness but will not negate the long-term positive outlook.

CNX IT (4352.9)

The index ruled firm and also moved past the target zone at 4300-4310 mentioned last week. After touching a high of 4448.65 on Thursday, the index turned weak on Friday. The short-term outlook remains positive and the index could move to the next target zone at 4470-4500. The positive outlook would be negated on a close below 4200.

CNX 500 (2910.35)

The price movement in this index was similar to that of other major indices. Except for a minor blip on Tuesday, the trend remained positive in the remaining days of the week. The index also moved past the target zone of 2850-2875 that has been mentioned in the recent weeks.

The near-term outlook is positive and a move to 2975-3000 appears likely. This view would be negated on a close below 2830.

B. Krishnakumar

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