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B. Krishnakumar

Nifty (2008.3)

Preferred View: The market sentiment was distinctly bullish during the week gone by, despite the expiry of the January month derivatives contract on Thursday. The index managed to hold above the crucial Fibonacci support level at 1890-1895 range and bounced back sharply on Tuesday.

As observed last week, the move past the positive trigger level of 1967 helped the Nifty move to the next crucial target level of 2000.

With a weekly close above the 2000 level, the Nifty appears to be tracing out the pattern indicated in the first alternative that was mentioned last week.

The Nifty appears to be heading towards the target zone of the 2250-2300 range.

After getting there, an extended corrective phase could descend upon the market. An eventual test of the 1350-1400 range subsequently is not ruled out.

Comments: The strong growth in quarterly performance of top companies acted as a catalyst for the market recovery. Besides, as observed in earlier weeks, as the short-term indicators were pushed to extreme oversold levels, it was only a question of time before such a sharp recovery happened.

The medium-term bearish view and the basis for such a view mentioned last week is still valid. The bearish divergence in the weekly chart is still a major cause of concern.

The immediate resistance level for the Nifty is placed at the 2025-2030 range, followed by the 2070-2080 band. A weekly close of above 2080 would lend credence to the view of a rally to the 2250-2300 range.

Alternative view: The move past the crucial trigger levels has caused us turn bullish in the short-term.

This 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 (6419.09)

The index managed to hold above the negative trigger level of the 5870-5880 range. The upward move in the last couple of days has resulted in the completion of a strong white candlestick in the just concluded week. The occurrence of this pattern, after the completion of a classic "doji" pattern in the earlier week, is a sign of bullishness.

The near-term outlook for the index is bullish. A weekly close above the immediate resistance of 6475 would lend weightage to the positive outlook; a close below 6060 would result in the resumption of the bearish view.

CNX IT Index (2806.25)

The index moved past the positive trigger level of 2790. The trend has turned positive. Investors may consider long positions in the index, with a stop-loss at 2740. The immediate resistance for the index is at the 2890-2900 range. A move past this zone would impart further strength.

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