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B. Krishnakumar

NIFTY (2455.5)

Preferred View: Except for a strong upward move on Thursday, the market action during the week was devoid of any momentum.

The index, however, managed to hit a new lifetime high during the week.

Though there is no indication of a reversal of the short-term uptrend, the recent price patterns do not lend confidence to support a bullish view.

The Nifty may either manage to post modest gains for the week or could get into a corrective mode.

The price pattern does not indicate the possibility of a strong upward move.

However, it is not advisable to exit long positions in a hurry unless there are confirmed signs of reversal. In such circumstances, it would be safer to tighten stop-loss for long positions.

Comments: It was an action-packed week for the markets. Key indices scaling new highs was the highlight of the week.

To accommodate the rising trend in crude oil price, the government revised domestic prices of petrol and diesel. This decision did not, however, affect market sentiment.

Though the index scaled a new historic high last week, there are signs of exhaustion behind the recent upward move.

The emergence of negative divergence between the movement in the index and the indicators such as the 14-day Relative Strength Index is a forewarning to the waning momentum behind the recent leg of the rally.

A close below 2425 would be an early sign of weakness; a drop below 2390 would warrant aggressive dilution of long positions.

A close below the strong support of 2300 would be required to negate the long-term positive outlook.

As observed in earlier weeks, the long-term bullish view remains intact. The index appears to be on course to move to the target zone of the 2550-2600 range. Investors may consider fresh exposures as and when fresh "buy" signals are triggered.

SENSEX (8060)

Preferred view: The index moved in line with expectations and closed above the psychological level of 8000 during the week.

It is, however, time to turn cautious owing to the occurrence of a "hanging man" and a "doji" pattern in the Japanese candlestick charts.

This is a sign of indecision and a short-term trend reversal is not ruled out. A drop below 7950 would push the index into a short-term correction.

CNX IT (3186.1)

Contrary to expectations, the index failed to seek higher levels during the week gone by. This, however, has not negated the positive outlook expressed last week.

The index appears on course to move to the target zone of the 3285-3290 range. The positive view would be negated only on a close below 3100.

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