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B. Krishnakumar

NIFTY (1615.3)

Preferred view: The market sentiment remained distinctly bullish during the week and the index ruled firm in line with last week's expectation. The near-term outlook remains positive. A move to the 1675-1700 levels appears likely. A close above 1635 would confirm this view. Only a drop below the crucial support level of 1500-1510 would negate this view.

Comment: The index moved past the positive trigger level of 1600 that was mentioned last week. This has now confirmed the positive outlook for the index. A move past 1635 would lend further momentum to the recent upmove. Two key technical indicators that lend credence to the positive outlook are: one, despite the sharp rally in the past week, the index is yet to reach the overbought region; and two, the 14-day RSI has held comfortably above the crucial support level of 46.

Alternative view: Though the index is expected to continue to show a firm undertone and move up, a close below 1500 would blunt this view. Besides, the multiple negative divergences between the indicator and the daily price movement are a cause of concern.

The negative divergence is still persistent in spite of the recent recovery. This indicates that a significant correction, both in terms of magnitude of the downside and time (over which the corrective phase pans out), would eventually have to set-in.

SENSEX (5044.8)

Preferred view: In line with last week's stated outlook, the index ruled firm. It also managed to move past the psychological 5000-point mark on Friday. This has confirmed the positive outlook for the index. The index appears to be headed towards higher levels and a move to the immediate target of 5250-5300 appears likely.

Comment: The index ruled firm and saw a sharp surge on Thursday, which was also the expiry date for the November derivatives contract. The rollover of a major portion of the holding to the December month contract is a positive development. The recent uptrend in the technology sector stocks is a major positive development that could help the Sensex sustain the upward move.

Alternative view: At the moment, only a close below 4730 would blunt the bullish outlook. If this is breached, the move could push the index to the next support level at 4590-4600.

S&P CNX 500 (1285.4)

Preferred view: The movement in this broad-based index mimicked those of the narrow indices such as the Nifty and Sensex. After a brief correction, quite a few mid-cap stocks have exhibited renewed strength. This has imparted a positive momentum in the index. The near-term outlook remains positive. The index appears on course to move to the earlier mentioned target of 1350-1400. A close above 1300 would confirm the positive outlook and could pave way for a rally to this zone.

Comments: The uptrend in mid-cap stocks, such as India Cement, Apollo Tyres, Sundaram Clayton, Andhra Bank and Balrampur Chini, helped the index seek higher levels. Software companies, such as Infotech Enterprises, Polaris Software and i-flex Solutions, also recorded a sharp upmove last week. The strength in mid-cap stocks and the recovery in technology sector stocks would provide the necessary thrust for the index to seek higher levels.

CNX IT (20644.8)

Preferred view: The index managed to move out of the trading range to which it was confined in the preceding week. The sharp recovery in the prices of technology heavyweights, such as Infosys, Satyam and Wipro, helped the index to break past the crucial resistance level at 20200. However, the index is now headed towards a major resistance at 21300. A move past this level would push it to a new bull orbit.

NASDAQ COMPOSITE (1960.2)

The index was confined within the limits of the positive and negative trigger levels of 2000 and 1870 respectively, indicated earlier. The outlook for the index remains bearish. A drop below 1890 would confirm this view. Only a move past 2000 would negate the bearish outlook.

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