This move was possible only with the help of a rally on the counters of ITC, State Bank and Bajaj Auto. In fact, with an increase of around 6 per cent on Thurday, ITC contributed the most it the latest rally. Besides State Bank and Bajaj Auto, other counters which provided fuel to the Sensex were Bhel, Reliance and Larsen & Toubro. Hindustan Lever has also helped the Sensex, but a major part of the gains was wiped out on Friday when it fell to Rs 1685 from a peak of Rs 1730.

As expected, the level of 3265 points has acted as a small hurdle for the Sensex. The outlook for the next two-three days is expected to be mixed. The reason for this is simple. While some pivotal yet to finish their short-term rally, majority havecompleted a major part of it and this might bring the profit-taking factor into picture. This, in turn, is expected to affect the sentiment. The forthcoming holidays may also have their impact as no traders would like to keep their position open for two days.

The heaviest of the lot, Hindustan Lever has given a weak closing on Friday and may continue to remain in profit-booking mode. ITC although is yet to show any weakness, it has gone up substantially and might attract profit-booking. Bhel is also a similar story. State Bank and L&T, however, have potential to go up further. As such, a lot would depend on how ITC and Hindustan Lever react in the coming days. Overall, the Sensex may shed some more points. But, this certainly does not mean that the market is ripe for short-selling. Although it is tempting, short-selling in pivotals should be avoided, unless the Sensex dips below the 3070-levels.

As far as the individual stocks are concerend, profit-taking should be considered, at least partially, on thecounters like EIH, German Remedies, Finolex Cables, Indian Hotels and Hindalco. Counters like Cochin Refineries, HDFC and SKF Bearings are however very attractive for short-selling.

On the positive side, stocks like Dr Reddy's Laboratories, Esab India, Escorts, Glaxo, Gujarat Ambuja, Gujarat Gas, IPCL, ITC Hotels, L&T, Nocil, Ranbaxy and United Phosphorus will remain bullish. In fact, IPCL, Nocil, and United Phosphorus have given a fresh buy signal and appear attractive for short-term buying.