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B. Krishnakumar

NIFTY (1540.7)

Preferred view: Contrary to expectations, the market sentiment remained weak. After a firm trend on Monday, a bearish trend prevailed on the next three days. The index staged a sharp reversal on Friday and bounced off a crucial support level of 1500-1510.

Though there is a case for the resumption of the bullish trend, only a close above 1600 would confirm the positive outlook. On the contrary, a close below 1500 would result in the resumption of the recent downtrend and could pave the way for a drop to the 1420-1430 range.

Comment: The weak sentiment resulted in the breach of the first support level of 1540.

This imparted further weakness and the index dropped to a low of 1509 before closing on a firm note on Friday.

The 14-day RSI also dropped below the first support level of 50-52. But, it managed to rebound from a strong support base at 46.

Though the RSI dropped below the first support at the 50-52 range, this has not negated the short-term bullish outlook. Only a break below 46 would signal short-term weakness.

Alternative view: Though the index is expected to resume its uptrend, a close below 1500 would blunt this outlook. This would lead to a drop to the next support level at the 1430-1470 range.

SENSEX (4838.5)

Preferred view: The index failed to move past the positive trigger level of 5170. It, however, dropped below the negative trigger level of 4840. This resulted in a short- term weakness that pushed the index to a low of 4737 on Friday. It, however, staged a recovery towards the close of the Friday's trading. The near-term outlook remains positive. A close above 5000 would confirm the positive outlook while a drop below 4730 would push the index to the 4610-4620 range.

Comments: Though the index dropped below the support level at 4840, it managed to remain above the more crucial support level at 4580. On account of the recent decline, the index has eased from extreme overbought levels and has moved towards the oversold zone. This limits its downside risk. The formation of the "Bullish Engulfing" pattern in the Japanese Candlestick charts also lends validity to the short-term positive outlook.

Alternative view: At the moment, only a close below 4730 would blunt the weak outlook. This could push the index to the next support level at the 4590-4600 range.

S&P CNX 500 (1223.1)

Preferred view: The index mimicked the movement in other major market indices. After a sharp rally in earlier weeks, mid-cap stocks witnessed selling at higher levels last week. The near-term outlook remains positive and the completion of a bullish "Hammer" pattern in the Candlestick chart on Friday confirms this view.

Comments: The weakness in mid-cap stocks imparted weakness in the index. Stocks such as BEML, India Cement, Apollo Tyres and Kotak Mahindra were prominent losers of the week. The near-term outlook is positive and a move above 1300 would confirm the positive outlook and could push the index to the 1350-1400 range. The long- term uptrend would remain in force as long as the index stays above 1160.

CNX IT Index (19356.6)

Preferred view: The index was confined to a narrow trading range last week. A sustained trend would emerge once the index breaks out of this range. The movement in the next few days would determine the short-term trend in the index. A move above 20200 would impart positive trend; a close below 18540 would impart bearishness.

NASDAQ COMPOSITE (1893.9)

As expected, a bearish trend prevailed last week. The index, however, managed to remain above the negative trigger level of 1870. After touching a low of 1878, the index closed at 1894 on Friday. The near-term trend does not appear positive. Only a close above 2000 would result in the resumption of uptrend. A close below 1870 could result in a prolonged weakness.

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