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B. Krishnakumar

NIFTY (2055.55)

Preferred view: Except for a firm trend on Monday, the index closed on a weak note on the remaining days of the week.

The Nifty failed to move past the resistance level at 2125-2130 that was referred to last week. The index did not even manage to close above the first resistance level at 2100.

The inability of the index to move past the resistance level is a sign of weakness. As observed last week, the 2043 mark is a crucial level for the Nifty. A drop below this level would result in the completion of a bearish "head and shoulder" pattern. The downside target for this pattern is fixed at the 1990-2000 range.

The recent price movement suggests that the index would drop below the 2043 level and test the support zone at the 1990-2000 range. Though the index is likely to drop to lower levels on the breach of the 2043 level, it would not affect the long-term positive outlook for the index.

The view of a rally to target zone of 2250-2300 is still valid. A close above 2086 would be an early sign of strength, while a close above 2111 would help the index progress towards the 2250-2300 range.

Comments: The price pattern and the depth in the market indicate the lack of willingness on the part of bigger players to commit funds ahead of the Union Budget.

The lacklustre trend witnessed last week may well spill over to the following week as well. Investors who are holding profitable positions may look for opportunities to reduce exposures. Tightening of stop-loss would be in order for all outstanding positions.

Alternate view: The long-term positive outlook would be under threat if the index fails to move past the crucial resistance zone at 2125-2130 range. A close below 1890 would negate the bullish outlook. This would indicate that the index is headed towards the downside target zone of 1350-1400.

SENSEX (6584.32)

The index failed to sustain above the crucial resistance level of 6685 that was mentioned last week. Helped by the positive trend on Monday, the index moved to a new historic high of 6719. The trend, however, turned bearish subsequently.

The recent move has resulted in the formation of a potential bearish "double top" pattern. A drop below 6450 would result in a slide to the 6100-6150 range. A close below 6070 would have long-term bearish consequences. Only a close above 6730 would confirm the positive outlook.

CNX IT INDEX (2890.3)

The index moved to the target zone of the 2950-2960 range. The near-term trend is positive and a move past 2960 would help the index move to 3020-3030 range. A drop below 2830 would have negative implications.

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