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B. Krishnakumar

NIFTY (1537.5)

Preferred view: The previous week's positive outlook was validated by the price movement in the past few trading sessions. As anticipated, the index ruled firm and also moved to the target zone of 1550-1560 mentioned last week.

The scope for any significant upward move appears limited at the moment. The completion of a "Doji" pattern in the Candlestick chart on Friday indicates uncertainty and indecision. A drop below the low of this bar (1516) would have negative implications.

The index could slide to the 1440-1450 range after the completion of the current leg of its upward move. Only a close above 1590 would warrant a re-look at the bearish outlook for the index.

Comment: After a prolonged sideways action, the index registered an upward move during the week gone by. It registered a net gain of about 50 points for the week. The recovery in the share price of ONGC and technology sector stocks played a key role in bolstering the index.

The FIIs, however, abstained from committing fresh funds in the market. The recent rally was fuelled mostly by domestic buying, if the FII flow data is any indication. The Budget proposals and the market perception of the June quarter performance would hold the key to market movement in the near term. In spite of the market uncertainties, there appears to be quite a few short-term investment opportunities in mid-cap and a few large-cap stocks.

Alternative view: There is no major change in the view expressed in earlier weeks. The medium-trend is bearish 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 (4870.58)

Preferred view: The index moved in line with expectations. It has already reached close to the target zone of 4950-4975 that was mentioned last week. The index could turn weak after moving closer to the psychological level of 5000. A drop below 4780 would be a cause of concern and could signify the start of a short-term bearish trend.

A drop below 4600 would confirm the weak outlook for the Sensex. This would also validate the view that the Sensex is headed towards the low formed at 4228. The price movement in the next few weeks would be critical in determining the long-term picture for the market. A break of 4780 and 4600 would be the key developments to watch out in the next few weeks.

Alternative view: While the index is expected to test the 4228 level, a move past 5500 would be an early sign of the reversal of the downtrend. As mentioned earlier, the expected weakness will not, however, negate the long-term positive outlook for the market.

S&P CNX 500 (1271.15)

Preferred view: The index ruled firm in line with expectations. It appears on course to move to the earlier mentioned target zone of 1291-1300. A drop below 1220 would impart weakness; a close above 1310 would have positive implications and could pave the way for a rally to the 1360-1370 range.

CNX IT (2140.75)

Preferred view: Similar to other indices, the IT index, too, ruled firm during the week. It also managed to reach the target zone mentioned earlier. Though there is a possibility of a rally to the 2175-2180 range, the index could turn weak after the short-term upward spike. All long positions would warrant a stop loss at 2110. A drop below 2095 would impart further weakness.

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