MUMBAI, December 16: The Sensex gained a robust 57 points to close at 3424.87. On Tuesday it has also cut the 7-day exponential moving average, which is at 3398. In so doing, it has put the reversal process on a more firm footing.

The market could face a resistance with the Sensex level at 3452. On October 22 the Sensex had started declining from the level of 4118. On November 20, it started recovering from the level of 3390 and reached a peak of 3628, at which point it felt resistance and retreated again. It touched a bottom of 3247 on December 11. The Sensex could now face a resistance at 3452, which it needs to cross. But considering that the market has declined substantially from the 4200 levels, and the recovery is now on, the index might as well break through this resistance. The Sensex must close above the 3452 level to give a firm indication that it would continue to move up.

In any case, for traders it would be useful to see how the Sensex behaves on reaching 3452. Most likely it will breach upwards through this resistance. Should that happen, the Sensex can sail up to 3840 levels.

Most of the scrips are bullish now. The new NSE week will open on Wednesday, and that could add to the bullish fervour. Because that will give another 5 days of trading.

And the BSE week has another three days to go. So you should not be in a hurry to book your profit. True that the froth could subside, but on the balance, there is scope for your profit to move up much higher. And therefore it would be worthwhile to hang on to your long positions.

Also, bulls may decide to step on the gas and try to escalate the scrips as best as possible before they break for Christmas.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.