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B. Krishnakumar

NIFTY (1853.55)

Preferred view: The market action last week does not throw up any significant pointers towards the overall market trend. The crucial question whether the correction that commenced in early January is over or not remains still unanswered. The series of "inside day" (a price bar that has a lower high and higher low as compared with the previous day) pattern in daily charts is an indication of indecisiveness.

However, the price movement last week has not triggered any panic signal either. Though the index ruled firm on Monday, it failed to move closer to the crucial make-or-break level of 1900 that was mentioned last week. On the remaining three days of the week, the index was confined to a narrow range.

The indecisive nature of the price action has not, however, altered the positive outlook for the near term and medium term. After a drop to the 1810-1820 range, the index is likely to resume the uptrend. Only a drop below 1765 would negate the near-term positive outlook.

A close above 1880 would be an early indicator of the resumption of the uptrend and a close 1900 would swing the market sentiment into a distinctly bullish mode.

Comment: After touching a high of 1874, the index turned weak on Monday. It failed to make any significant headway in either direction on the remaining four days of the week. This could be explained by the fact that the earlier sharp upturn in the index from the low of 1669 had pushed the index into an overbought zone.

The sideways price movement since Tuesday appears to be a correction to enable the index and the indicators to ease from the overbought zone. Once this is over, the Nifty could stage an attempt to move towards the earlier peak at 2014.

Apart from these factors, the composition of the Nifty would change from Monday with the inclusion of ONGC. The large market capitalisation and volatility attached to the ONGC stock could have a significant bearing on the overall market direction.

Alternative view: While there is o significant price movement to confirm or negate the positive outlook, a drop below 1770 would result in the resumption of the earlier downtrend. One has to hope that some decisive price move occurs at least in the following week.

SENSEX (5838.45)

Preferred view: Similar to the Nifty, the movement in the Sensex too was not quite significant to provide any clue about the near-term trend. Except for a strong move on Monday, the index remained range bound during the week.

As observed last week, the near-term trend remains positive and a move past 6000 would be a bullish signal. The index has also managed to close above the downward sloping trendline connecting the tops formed at 6249 and 6083.

Alternative view: While the near-term trend appears positive, a close below 5590 would reinstate the bearish trend and could pave the way for a drop to the 5250-5300 range. The price movement this week could provide further evidence of the near-term market direction.

S&P CNX 500 (1531.15)

Preferred view: The index is till hovering around the crucial resistance zone at the 1550-1560 range. An upmove towards this area has been repelled on three occasions in the past. Even on Monday, the index stalled and reversed direction after moving closer to this range. The index could target the 1600-mark on a break above this zone.

CNX IT (20737.4)

Preferred view: As anticipated, the index ruled firm and also managed to move past the positive trigger level of 20600. The near-term outlook remains positive. A move past 21500 would not only be a positive trigger, but would also confirm the bullish near-term outlook. At the moment, only a drop below 19900 would negate the positive outlook.

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