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B. Krishnakumar

NIFTY (2077.95)

Preferred view: In line with expectations, market sentiment remained bullish during the just concluded week.

After a strong move on Monday, market activity was marked by a relatively higher degree of volatility. The Nifty managed to surge past the first resistance level of 2025-2030. This helped the index register a weekly gain of about 69 points.

Despite the positive undertone, the index failed to close above the resistance level at 2080. After breezing past this level on Friday, the index failed to hold ground and closed at 2077.95.

The Friday's price action ended as a "spinning top" pattern in the Japanese candlestick chart. This is a sign of uncertainty and the index may get into a short-term corrective phase.

From a medium-term perspective, the index appears on course to move to the target zone of 2250-2300. This, however, is subject to the Nifty moving past the intermediate resistance at 2120-2125 range. The positive outlook would be in force as long as the Nifty holds above the crucial support level at 1890-1895.

Comments: The flow of improved quarterly performance from top companies provided impetus to the bullish trend. The upgrading of the country's sovereign rating by international rating agencies helped the cause.

The decision to enhance foreign direct investment limit in the telecom sector to 74 per cent from 49 per cent was another major development during the week.

Alternate view: The move past the crucial trigger levels has caused us to turn bullish in the medium-term.

The positive view would be negated if the index were to close below 1890. This would indicate that the index is headed towards the downside target zone of 1350-1400.

SENSEX (6618.23)

Though the index managed to settle at a higher level on a week-on-week basis, the occurrence of a series of black candlesticks in the daily price chart is a cause of concern.

The series of black candles along with the "spinning top" pattern on Friday indicates that the index could get into a corrective phase. The immediate support level for the index is placed at 6435-6460 range. A move above 6700 would be a sign of strength.

CNX IT INDEX (2870.3)

The index moved in line with expectations. The trend remained bullish and the index moved to the target zone of 2890-2900 range. The near term trend remains positive and a move to 2950-2960 range appears likely. The near term positive view would be negated if the index declines below 2800. Stop-loss for long positions may be placed at 2825.

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