The Hindu Business Line : Index Outlook

As members of the Indian corporate sector vied with each other in out-dazzling investors with spectacular numbers, the markets looked almost bored. It was perhaps the festive atmosphere in the country that made concentrating on mundane money matters difficult. The Sensex closed the week unchanged from the previous week's closing level.

But the week was not entirely devoid of thrills. The Sensex came tantalisingly close to the 13000 mark (the latest on the most-watched list), hitting an intra-week high of 12994.4 before reversing on Tuesday. FIIs reverted to buying in cash and selling in the derivatives segment.

The BSE Midcap and Smallcap indices performed much better than the Sensex, recording a gain of over one per cent. These indices are moving sideways and continue to look promising. Among the sectoral indices, the ones belonging to FMCG, healthcare and oil and gas are currently at crossroads, as they are struggling with important resistances. The capital goods sector and the metals sector are the ones that look positive for the week ahead.

The momentum indicators in the daily chart are signalling a sell. We are beginning to see traces of weakness in the weekly charts, too. But the 10-day ROC continues to be in the positive zone and the 14-day RSI is positioned at 65. This denotes that though there is short-term weakness, the medium-term outlook continues to be positive. A fall below 12500 is required to turn the medium-term trend lower.

We expect the Sensex to move in a range between 12500 and 13000 next week. Our medium-term outlook will stay positive as long as the Sensex stays above 12500. However, no fresh buys should be initiated if the Sensex falls below 12500. The support below 12500 would be at 12189. On the higher side, a strong breakout beyond 13023 is required to take the sensex to 13248.

Nifty (3683.5)

The Nifty hit an intra-week high of 3742.5 last week before closing with a small gain of seven points. The short-term trend is currently negative. But watch out for short-term buying opportunities at 3672, 3652 or 3597. Do not initiate fresh longs below 3597.

On the upside, the recent high of 3742 is the first target for the week. A breakout past 3760 will take the Nifty to 3821.

Global Cues

The Dow Jones Industrial Average (DJIA) has closed above the 12000 mark for two days now. The weekly chart of the DJIA continues to show strength though there is a perceptible momentum slowdown in the short term. Other equity markets, too, moved sideways last week but with a positive bias.

The cut of 1.2-million barrels per day announced by OPEC had no effect on crude prices, as there are doubts regarding the enforcement of this order. Nymex light crude futures for November delivery closed at $56.82 on Friday, its lowest close for this year. The next support for crude lies at $55. This should halt the current slide. Base metals such as copper and aluminium closed higher for the week.

Lokeshwarri S. K.

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