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B. Krishnakumar

Nifty (1977.5)

Preferred view: Contrary to the expectations of a bearish trend, a distinctly positive sentiment prevailed last week. There were a couple of key developments that indicated that the earlier bearish view was losing validity.

The Nifty's hesitancy to move below the key support zone at 1890-1895 band was the first sign of strength. The index managed to bounce off these levels and also recorded a weekly close above the crucial positive trigger level of 1950 that was mentioned last week.

The near-term trend has turned bullish and a move to the 2030-2040 range appears likely. A move past the immediate resistance at 1988 would strengthen the case for a rally to this target zone. The trend would remain bullish as long as the index holds above the support zone at 1940.

Comments: In contrast to the bearish trend that prevailed the week before, the trend turned positive last week. The Nifty closed on a firm note on all five trading sessions of the week. Softening of crude oil price in the international markets and positive announcements relating to the banking sector imparted buoyancy.

Helped by the bullish undertone, the Nifty managed to edge above the upper boundary of the recent trading range between 1974 and 1896. The index is likely to reverse direction in the May 11-13 time window. A sharp reversal would materialise if the index manages to seek the target zone of 2030-2040 in this time window.

Sensex (6388.48)

Preferred view: As opposed to the expected bearish outlook, the index ruled firm and moved past the resistance zone at 6220-6230. The close above the crucial resistance level of 6300 has imparted bullishness. The recent price patterns indicate that the Sensex would move up to the immediate target level of the 6525-6550 range.

Comments: While the near-term trend appears positive, there is a looming threat in the form of a potential "head and shoulder" pattern. A strong bearish trend would emerge on the completion of this pattern. The development of this pattern is more pronounced in the weekly charts.

The "left shoulder" and the "head" are in place while the price appears to be tracing out the "right shoulder" of the potential pattern. Though this pattern is still within the realm of a possible event, it would be confirmed if the Sensex holds below the 6640-6650 range and drops subsequently below the support at the 6050-6060 range. The completion of this pattern may push the Sensex down to the 5250-5300 range.

CNX IT (2640.8)

Similar to other key indices, the CNX IT index too closed above its positive trigger level at 2600. As a result, the trend has turned bullish and a move to the 2775-2800 range appears likely. Holders of long positions may place the stop-loss at 2570.

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