• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

B. Krishnakumar

NIFTY (1506.1)

Preferred view: The much awaited downward correction set-in last week. The index dropped by about 9 per cent to the intra-day low of 1434.7 on Friday. The short-term outlook appears positive with a recovery to the 1540-1550 range likely. The price action beyond this level would be critical in determining the near-term trend. A close above 1575 would help the index move to the target zone of 1620-1650 that was mentioned last week.

Comments: As observed last week, the drop below 1500 triggered a downward correction. After recording a low of 1434, the index staged a sharp recovery on Friday to close at 1506. The recovery on Friday was off a crucial support level at 1430. This is a positive development. Besides, a bullish "Hammer" pattern is visible in the Japanese Candlestick chart, which again is a very healthy sign.

Alternative view: Though the resumption of the uptrend is the preferred view, the price action in the next few days would provide a clearer picture of the near-term trend. A break below the crucial support level of 1430 would have negative implications. This could pave the way for a further drop to the next support level at the 1270-1280 range.

SENSEX (4757.4)

Preferred view: Similar to the Nifty, Sensex too staged a sharp recovery on Friday after having logged a sharp decline in the first four trading days. The near-term trend appears positive and a move to the 4850-4860 range appears likely. The price action after this stage would provide critical clues about the direction and strength of the near-term trend. Only a close below 4580 would be a worrying signal and could impart a prolonged bearish phase.

Comments: As observed last week, the occurrence of Spinning Top pattern forewarned an impending correction. The expected correction pulled the index down to an intra-day low of 4600 on Friday and the index staged a 158-point rally thereafter to close at 4757. The formation of a Bullish Engulfing pattern on Friday is a positive development.

A close above 4960 would result in the resumption of the overall uptrend. This could push the Sensex to the next target zone of 5040-5050. Over a longer time frame, the index appears to have the potential to break above the historic high of 6151 recorded in February 2000. This view would be blunted if the index were to close below 4050.

S&P CNX 500 (1180.4)

Preferred View: The behaviour of this index was in line with other benchmark indices. After a sharp slide, the index recovered on Friday. The near-term outlook appears positive and a move to the 1200-1220 range appears likely. The long-term target of a rally to the 1350-1400 range remains valid.

Comments: After the breach of the critical support level of 1180, the index managed to recover ground on Friday. This is a positive development. The bullish stance, as far as the long-term trend goes, remains in force as long as the index stays above 1140. The recovery in the share price of key stocks such as Kotak Mahindra Bank, ICICI Bank, United and BEML could spark a rally in S&P CNX 500 as well.

CNX IT Index (17775.9)

Preferred View: The index managed to move close to the target zone of 19000 that has been mentioned in earlier weeks. Taking into account the positive trend in key software stocks such as Satyam, Wipro and Infosys, the near-term outlook for the index remains positive. Only a drop below 17000 would warrant a re-look at the view.

NASDAQ COMPOSITE (1865.6)

As expected last week, the index ruled weak and dropped to a low of 1842 on Friday. The near-term outlook remains bearish. As mentioned last week, a drop to the1750-1800 range appears likely. Only a close above 1930 would negate the bearish outlook and impart positive sentiment.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Large-caps: From a bang to a whimper

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line