The Hindu Business Line : Short-term outlook turns bullish

Preferred View: The Nifty moved in line with expectations. After a short-term pull back on Monday, the index recorded a sharp slide on Tuesday. In the process, the Nifty moved closer to the target zone of 1955-1958 that was mentioned last week.

The sharp reversal in the past couple of trading days is a sign of strength. The Nifty also bounced off a crucial support level at the 1970-1972 zone. The sharp recovery in the index from this level is a positive development. As observed in earlier weeks, the Nifty now appears poised to move towards the long-term target zone of 2250-2300.

The near-term outlook for the Nifty is bullish and a move to the 2100-2105 range appears likely. A close above 2105 would help the index move to the 2140-2145 range. The immediate resistance is at the 2075-level. A move past this level would help the index seek the next target zone at the 2100-2105 range. The positive view would be in force as long as the index holds above 1990.

Comments: It was an eventful week for stocks. After a sharp slide on Tuesday, the indices staged a sharp reversal in the last couple of trading sessions. Selling by FIIs has been the primary reason for the bearish sentiment that prevailed in recent weeks. The reversal in the past couple of trading sessions has resulted in the completion of a "key reversal bar" on the weekly charts. A weekly close above the high of this bar (2072-level) would confirm the reversal of the bearish trend as well as the onset of the next leg of the upward move.

The positive view would be under threat if the index drops below 1990. Though this will not alter the long-term view of a rally to the 2250-2300 range, the breach of 1990 would delay the progress towards this zone. The index is likely to drop to 1955-1965 subsequently.

Sensex (6605.0)

Preferred view: Helped by the recovery in the price of Reliance, SBI and technology sector stocks, the Sensex managed to close on a firm note for the week. The near-term outlook is bullish and the index is likely to move to the 6770-6790 range. The short-term positive view would be valid as long as the index holds above 6450.

Comments: Stocks from the technology sector attracted market interest during the week. With the dawn of the new financial year, the market interest would be influenced by the market perception of the financial results that would be announced by the corporate sector.

CNX IT (2946.3)

The short-term outlook appears positive. The index could move to the 2988-3000 range. Stop-loss for long positions may be placed at 2880. Fresh long positions may also be considered on a move above 2953, with a stop-loss at 2919.

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Short-term outlook turns bullish