Technical outlook for heavyweight stocks

E ven as the world raised a toast to the US that voted for a new order in which racial hierarchy ceases to matter, stock markets reversed downwards. It was probably President-elect, Barack Obama’s grim reminder about the “worst financial crisis in a century” that brought the six-day-old party in equity markets to an abrupt end. Our medium-term view too is ambivalent. Sensex reversed from the peak at 10945 on Wednesday. Our medium-term trend deciding level at 10,700 was breached only fleetingly on that day. This remains an important resistance level and penetration of this level will pave the way for a rally to 11630 or 12879. It is however difficult to envisage a move beyond the second target just yet.

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The short-term trend in Sensex is positive. If it holds above last week’s trough at 9600, there can be a surprise rally to 10945 or even 11630. Immediate supports for the index are at 9320 and 8930. The index needs to close below the second support to negate this view and re-kindle the gloom and doom scenario.

Text & Image Courtesy: Business Line