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B. Krishnakumar

NIFTY (1449.3)

Preferred view: The key market indices managed to rule strong last week. The index managed to move past the initial target zone of 1410-1420 that was mentioned last week. The move past the previous pivot high of 1431 is a positive development. This has almost negated the earlier view of a drop to the 1230-1250 range.

The near-term outlook appears positive. A move towards the key resistance level of 1490-1500 appears to be on the cards. However, the series of negative divergence between the 14-day RSI and the daily price chart is a cause of concern. This indicates that a sharp downward correction could be round the corner. A short-term correction is likely to take shape once the index reaches the 1490-1500 range.

Comments: The stock market sentiment remained distinctly bullish last week. Aided by strong FII fund flow, the key market indices managed to move above their recent pivot highs recorded a couple of weeks ago. Only a drop below 1280 would negate the overall positive market outlook.

Alternative view: The sustained bull-run at the stock market has pushed the indices to a three-year high. The momentum behind the recent move, the participation of a wide range of stocks, and the improving economic fundamentals has put the possibility of a drop to 849 on the backburner. Only a close below 1160 would lend credence to this view. On the other hand, a close above 1550 would almost negate this possibility and would be a strong indicator that the market is in a new bull orbit.

SENSEX (4552.9)

Preferred view: The index managed to move past the target zone of 4450-4470. The strong move on Friday helped the index close above the positive trigger level of 4520. This has almost negated the earlier view of a drop to the 3940-3950 range. The near-term outlook continues to remain positive with a move to 4700-4720 on the cards.

However, the development of a negative divergence in the weekly price chart and indicators such as RSI is a worrying factor. For the first time since the start of the recent rally, a negative divergence has evolved in the weekly time frame. This could be construed as an indication of a prolonged downward correction in the near term. This correction could set-in on the completion of the anticipated upmove to the 4700-4720 range.

Comments: The market ruled positive last week. Quite a few stocks touched new yearly highs, which is an indicator of a strong bull market. While the overall outlook continues to remain bullish, a drop below 4220 could impart a short-term bearish trend.

S&P CNX 500 (1160.8)

Preferred View: Aided by the sharp upswing in quite a few large and mid-cap stocks, the index managed to rule firm last week. The recent upmove does not appear complete as yet. A move towards the 1350-1400 range appears to be on the cards.

Comments: Only a drop below 940 would negate the bullish outlook and also the possibility of the rally to the1350-1400 range. The bullish outlook for a few stocks such as Kotak Mahindra Bank, Lupin, Sundaram Clayton, ABB and Aurobindo Pharma confirms the positive view for the index.

CNX IT Index (17195.9)

Preferred View: As anticipated, the index managed to seek higher levels. The strong trend in technology stocks such as HCL Infosystems and MphasiS BFL helped the index seek higher levels. The overall outlook for the index remains positive. The view of a rally to the 19000 mark continues to remain valid. Only a drop below 15200 would negate the positive outlook for the index.

Nasdaq Composite (1880.6)

After a weak trend on Tuesday, the index managed to stage a sharp recovery on the remaining three days of the week. The downward correction appears complete now. The index appears to be headed towards the 2090-2100 range. A move above 1914 would be an early indicator of the rise to the above-mentioned range.

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