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B. Krishnakumar

NIFTY (1356.6)

Preferred view: As mentioned last week, the overall outlook for the market continues to remain positive. There is no hint of the reversal of this trend as yet. The index has also managed to break above the resistance level of 1340-1350 that was mentioned last week. Ideally, the index is now expected to move towards the next target range of 1450-1500.

Price declines could, therefore, be viewed as an opportunity to take exposures with a close stop loss. Only a close below 1240 would warrant a re-look at the current bullish outlook. Given this backdrop, all long positions would warrant a close stop loss to protect unrealised gains.

An efficient money management technique is a key factor to extract the maximum gain from the market. This is especially true in when a market is in a strong uptrend as it has been over the past few weeks. Profit booking may, therefore, be considered at regular intervals, as it would provide cushion in terms of placing a realistic stop loss rather than being stopped out prematurely by adopting a conservative approach.

Comments: As anticipated, the index saw a sharp correction. The correction was significant in terms of value, but in terms of time, it lasted just for a day. After a sharp decline on Monday, the market staged a strong recovery on Tuesday and consolidated further in the remaining days of the week.

In the weekly chart, the Relative Strength Index is perched at the 80 mark, which is normally considered as an overbought reading. This, however, does not necessarily indicate that the index is headed for a sharp slide. The uptrend can resume after a brief sideways action. The momentum behind the rally and a look at other indicators suggest that the uptrend is intact and has some more room on the upside.

Alternate View: Though the market continues to exhibit unusual strength, it still does not rule out the possibility of a retracement towards the earlier major low of 849. Only a move past 1550 would almost negate this possibility and would be a strong indicator that the market is in a new bull orbit.

SENSEX (4244.7)

Preferred view: While the index dropped as anticipated, it managed to stay above the crucial bearish trigger price of 3940. The overall outlook for the index is bullish. As mentioned last week, a move towards the 4350-4400 range appears likely.

Comments: The kind of bounce-back witnessed on Tuesday (after the sharp slide on Monday) is indicative of the strong bullish undertone in the market. A break below the upward sloping trend line (present value 4100) would be an early indicator of the onset of the technical correction. However, only a drop below 3940 would warrant a reassessment of the bullish outlook.

S&P CNX 500 (1100.5)

Preferred View: As observed last week, the index managed to move to the target zone of 1100-1120. After touching a high of 1106, the index closed at 1100 on Friday. Going by the recent price action, the immediate upside target is placed at the 1140-1150 range.

Comments: The overall outlook for the index appears positive. Quite a few large and mid-cap stocks appear to have significant upside potential even from current levels. This lends credence to the overall bullish outlook.

Apart from the mid-cap pharma stocks such as Ajanta Pharma, FDC and Elder Pharmaceuticals, the outlook for biggies such as Ranbaxy and Aurobindo, too, appears positive. Among the large cap stocks, the likes of HPCL, Tata Steel and Tata and Reliance appear to have further upside potential.

NASDAQ (1810.5)

Preferred view: The index moved in line with earlier expectations. After a correction on Monday and Tuesday, the index managed to stage a recovery on the remaining days of the week. The overall outlook is bullish and as iterated in earlier weeks, a move towards 1875-1900 range appears likely.

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