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B. Krishnakumar

SENSEX (3726.5)

Preferred view:

After the downward correction that lasted three days, the index managed to stage a sharp recovery in the last two trading days of the week. As a result, the near-term trend has now turned positive. The index appears on course to break the key resistance level of 3760. A close above 3850 would pave the way for a rally to the 4050-4100 range. On the contrary, a close below 3540 would negate the positive outlook and could lead to a drop to the 3400-3450 range.

Comments: Though the anticipated correction materialised last week, the decline was relatively shallow. The index did not decline to the 3450 level that was mentioned last week. Instead, it found support at the fibonacci level of 23.6 per cent of the 2904-3750 range. The price movement this week would provide critical insight about the future market direction.

Alternate view: The index appears on course to break above the 3760 level. A close above 3750 would be an early indicator of the resumption of the recent upward trend. While there is a possibility of a move to the 4050-4100 level, the view of a drop to the 2500-2600 range is still not completely ruled out. As observed in earlier weeks, the possibility of a drop to this range would be completely negated only if the index closes above the 4900 mark.

NIFTY (1162.7)

Preferred view: The sharp recovery in the last couple of days has imparted positive trend. The Nifty appears to be headed towards the next resistance level of the 1200-1210 range. A close above 1180 would be an early indicator of the resumption of the upward trend. On the other hand, a close below 1080 could impart negative trend.

Comments: Similar to the Sensex, the Nifty too saw some downward correction last week. Unlike the Sensex, the Nifty declined to the projected target level of 1070-1080. After dropping to a low of 1089 on Tuesday, the index managed to seek higher levels by the close of the week. The formation of a bullish "Hammer" pattern in the Japanese Candlestick charts is indicative of a strong bullish trend.

Alternate view: While the Nifty appears on course to move to the 1200-1210 range, the behaviour of the index beyond the 1210 level would provide a valuable clue about the long-term trend. The recent chart patterns do not provide conclusive evidence of the long- term trend. Only the price action in the next few weeks would provide further clarity about the market's long-term direction.

S&P CNX 500 (919.4)

Preferred View: As anticipated in earlier weeks, the downside correction took shape this week. However, the decline was not very significant both in terms of time and value. This is a positive development and is indicative of the underlying bullishness in the market. The index appears to have the potential to seek the 975-1000 range in the near term.

Comments: Some sort of a Morning Star pattern was completed on Wednesday. This was followed by a sharp upmove in the next two days. This is a bullish development from a Japanese Candlestick perspective. The recovery in the price of mid-cap stocks such as Orchid Chemicals, Indian Rayon, Saw Pipes and Sesa Goa supports the bullish near-term view.

NASDAQ (1730.7)

Preferred view: After some weakness on Monday, the index managed to recover ground in the remaining three days of the week. As mentioned in the earlier weeks, the near-term trend for the index appears positive. A move towards the 1875-1900 level appears likely in the near term. A rise above 1780 would impart bullish momentum in the index. A drop below Rs 1,670 could pave the way for a drop to 1590.

Comments: While the overall trend remains positive, a close below 1590 would warrant a re-assessment of the bullish outlook. The break above the key resistance level of 1780 is critical for the sustenance of the uptrend.

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