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B. Krishnakumar

NIFTY (1521.1)

Preferred view: After the post-election-results-carnage, the stock market has, by and large, remained range-bound. The decline from the recent high of 1912, however, does not appear complete as yet. The near-term trend appears weak. A drop below 1420 would confirm the short-term weak outlook. This would also be an early indicator that the index would at least retest the recent low at 1292.

A drop below 1230 could impart further weakness and may result in a slide to the 1050-1100 zone. A retest or a drop below 1292 and a subsequent base-building formation would be a major positive development.

There are, however, myriad possibilities as far as the nature and degree of the ongoing decline is concerned. After the completion of the present downward move, at least a substantial retracement of the drop from the high of 2012 would take place. At the moment, it would be premature to make a call regarding the completion of the corrective or bearish phase.

Comment: The index moved in line with the observations made a couple of weeks ago. It dropped below the earlier mentioned target zone of 1340-1350 and sought support at 1292. Though there is a remote possibility of the index having completed the downtrend at this low of 1292, there are no indications to this effect, as yet.

The price action in the following weeks would provide clue about the direction of the next major move in the market. On the upside, the index faces resistance at close intervals between 1550 and 1650. The 1625-1650 range is the critical resistance zone of the index.

Alternative view: While the near-term outlook is weak, a move above 1750 would have positive implications. It would indicate that the market has formed an intermediate bottom at 1292. However, only the momentum and nature of the upmove would determine whether the low at 1292 represents completion of the earlier downward phase.

SENSEX (4889)

Preferred view: Helped by the recovery in oil and banking sector stocks, the Sensex and the Nifty managed to ward off any significant downward pressure. The near-term outlook for the index does not appear positive. At least, a test of the recent low of 4227 appears likely. A drop below the 4080-4090 range would result in further weakness and have negative implications for the index.

Though the index appears to be in the last leg of the ongoing phase of decline, the magnitude and momentum of this phase remains to be seen. It would be a positive signal if the drop towards the recent low of 4227 turns out to be a slow-paced and a time consuming affair. Only the price movement in the following weeks would throw up clues about the medium-term trend.

Alternative view: While the near-term trend is weak, a move past 5500 would be an early sign of the reversal of the recent downtrend. As mentioned in earlier weeks, the expected weakness will not, however, negate the long-term positive outlook for the market.

S&P CNX 500 (1258.8)

Preferred view: The chart pattern in this index was similar to that of other benchmark indices such as the Sensex and Nifty. After a sharp drop on Thursday, the index recovered ground on the next day. The near-term outlook remains weak and a gradual drop to the recent low of 1087 appears likely. Only a move past 1500 would have positive implications for the index.

CNX IT (2033.9)

Preferred view: The National Stock Exchange has altered the base value of the index. As a result, the index stands reduced to tenth of its earlier value. The index is likely to remain stuck in a trading range. A move past 2180 would have positive implications while a drop below 1950 could result in a slide to the 1750-1800 range.

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