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B. Krishnakumar

Nifty (1967.35)

Preferred view: The index moved in line with expectations. A bearish trend prevailed last week and the Nifty moved to the vicinity of the target zone of the 1895-1900 range. The recent patterns indicate the possibility of a short-term bounce towards the 1990-2000 range. It remains to be seen if this recovery is a just a correction or the start of a new upward move.

The price movement in the subsequent weeks would provide clues about the nature of this rally. Till such time the index trades below the 2005-mark, there is a fair chance that the recent recovery would be a correction to the earlier decline. A weekly close above the 2005-mark would indicate that the index is headed towards the long-term target of 2250-2300 range.

Comments: The stock market sentiment remained bearish in the first couple of trading sessions. The market did not appear too enthused by the performance of TCS either. The sentiment turned positive on the announcement of quarterly performance by Wipro and Satyam. The index managed to recover ground in the last couple of trading sessions.

Holders of long positions may have a stop-loss at 1949. Partial profit taking maybe considered on a move towards the target zone of 1990-2000. Fresh short positions may be considered if the index gets to the vicinity of this resistance zone. Stop-loss for fresh short positions may also be placed at 2005.

Sensex (6345.57)

Preferred view: The Sensex ruled weak as anticipated last week. It dropped to the target zone of 6125-6135 and reversed direction subsequently. The recovery in the past couple of days has imparted short-term strength. The index appears to be in the process of filling up the gap that was created by a weak opening on Thursday.

The index is likely to resume the downtrend after filling this gap. This view would be valid as long as the Sensex trades below 6450. A weekly close above 6520 would indicate that the index has completed a major low at the recent bottom at 6118.

Comments: The market sentiment got a boost on the flow of positive news on the monsoon front. Indications of a normal monsoon this year had set the tone for a recovery in the share price of market heavyweights. Though the recent recovery appears to be promising, the price pattern does not suggest the start of a new leg of a bullish move. The action in the ensuing week is likely to lend clarity about the depth of this rally.

CNX IT (2639.2)

The index ruled weak and also dropped below the earlier mentioned target level of the 2540-2550 range. The short-term outlook appears bullish and a move to the 2670-2680 range appears likely. The long-term outlook remains weak and would turn positive on a close above the resistance level at 2790.

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