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B. Krishnakumar

NIFTY (1488.5)

Preferred view: In the past week, stock price movements were more pronounced.

This is a break from the trend of stock prices moving in a narrow range witnessed for a few weeks now.

After a sharp drop on Wednesday, the Nifty staged a healthy recovery in the last couple of trading sessions.

As a result, the near-term trend has turned positive. A move to 1550-1560 range appears likely.

A break past this level would lead to a test of 1625-1630 range. This, however, has not negated the earlier view that the index would test the low formed at 1292.

On completion of the anticipated near-term upmove, the index is likely to resume the downtrend.

As observed in earlier weeks, the medium-term trend is still bearish. Only a close above the 1700 would warrant a re-look at the bearish outlook.

Comment: The trading activity last week was marked by the return of volatility in the market.

This has provided a near-term direction to the indices.

The pick-up in trading volume and the expiry of June month derivatives contract provided impetus to the market sentiment.

The firm trend in key index stocks such as Reliance, SAIL, Tata Steel and Infosys triggered a sharp rally on Thursday.

The impending IPO of Tata Consultancy Services, the Union Budget and the flow of quarterly earnings announcements for the period ending June would have a major influence on the direction of the market.

Alternative view: The view expressed in earlier weeks remains unchanged.

The medium-term trend is weak and only a move past 1750 would impart positive momentum.

This would indicate that the decline that commenced at 2014 in January 2004 has been completed at the recent intermediate low of 1292.

The momentum and the structure of the market movement would determine the long-term trend.

SENSEX (4756.3)

Preferred view: Though the index logged a net decline of about 14 points for the week, the daily movements was much more pronounced than in the recent past.

The 90-point drop on Wednesday followed by the sharp recovery in the next couple of days imparted life into the market that was plagued by inaction in the earlier weeks.

The break below the crucial trigger level of 4650 indicates that the market is headed towards the earlier low at 4228.

A drop below 4600 would indicate the Sensex is on course to test the low of 4228.

The Sensex could, however, seek higher levels in the near term. A move to the 4950-4975 range appears likely.

The upmove in the last couple of days was underpinned by the recovery in the share price of Reliance Industries.

Alternative view: While the index is expected to test 4228-level, a move past 5500 would be an early sign of the reversal of the downtrend.

As emphasised in the earlier weeks, the expected weakness will not, however, negate the long-term positive outlook for the market.

S&P CNX 500 (1225.3)

Preferred view: The formation of a "reversal day" pattern on Thursday marked the onset of a near-term positive phase for the market.

The index could head towards the immediate resistance level at 1291-1300 range.

The earlier pivot high at this level and the downward sloping moving averages are likely to act as stiff resistance for the index.

Only a move past 1400 would indicate the completion of the downward move.

CNX IT (2105.7)

Preferred view: Unlike the other indices, the IT index managed to post a healthy 77-point gain for the week.

As observed last week, the move past the positive trigger of 2070 imparted bullishness.

The near-term outlook remains positive and a move to 2150-2160 range appears likely.

A close above 2165 would be a positive trigger to take long positions with a close stop loss in place.

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