The Hindu Business Line : Positive near-term trend for Nifty

Preferred view: The index went into a corrective mode with the price action being confined to a trading zone of about 60 points for the week. The near-term trend remains bullish and the index could stretch itself into the target zone of the 2250-2300 range.

The positive trend would be in force as long as the index holds above the negative trigger level of 2160. Short-term traders may consider long position on a close above 2235, with a stop-loss at 2198. Investors who have entered at fairly lower levels may tighten the stop-loss, as the indices are heading deeper into the "overbought zone".

Though it is not unusual for the markets to get deep into the overbought zone in a bullish market, such a situation is unlikely to last for long. Besides, the recovery from the low of the 1890-1895 range has been devoid of any significant correction.

Considering that the market always moves in a cycle of "tide and ebb", a correction that is proportionate to the earlier rally would materialise sooner than later. Though it would be inappropriate to jump the gun, it would always pay to be on the side of caution. Fresh exposures in index stocks may be avoided and investors need to be alert to take profits on a periodical basis.

Long-term View: Though we are calling for a correction, the long-term rally is not over as yet. After the expected corrective phase, the index is likely to continue its upward march to the 2550-2600 range. The long-term positive outlook would be under threat if the index closes below the 2050 mark.

SENSEX (7210.77)

Preferred view: The market action was in line with expectations. After a brief correction, the trend turned bullish since Thursday. The index faces resistance at the 7250-7260 range. A close above this range would impart strength and help the index move to the next target of the 7300-7400 band.

The short-term trend would turn bearish if the Sensex closes below 7030. This would push the index to the 6850-6900 range. Considering that quite a few index stocks have not participated in the recent rally, it would be advisable to turn cautious and reduce exposures on price rally.

CNX IT (3051.35)

After a corrective phase in the early part of the week, the index appears to have resumed the upward trend. The near-term outlook is positive and the index appears on course to move to the target zone of 3140-3150. Holders of long position may have a stop-loss at 2975. Fresh long positions may also be considered on a close above 3090, with a stop-loss at 3000.

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