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B. Krishnakumar

NIFTY (1988.3)

Preferred view: After a strong upward move on Monday, the index was confined to a narrow trading zone during the week. The near-term outlook remains positive and the Nifty is likely to move to the earlier mentioned target of 2030-2040.

This view would be valid as long as the index holds above the negative trigger level of 1974. A drop below 1974 could push the index down to the 1930-1940 range. Holders of long positions may have a stop-loss at 1974.

Comments: The market action during the week was devoid of any momentum. Though the index recorded a weekly gain of about 11 points, the activity in frontline stocks was listless. After a strong upward move in the earlier week, the Nifty appears to have paused for breath during the week gone by.

The series of relatively narrow range bars recorded in the past few days indicates that the index is recouping the momentum expended earlier when it zoomed to a high of 1980 from the low of 1896. After such a strong upward move, it is not unusual to see prices get into an "energy recharging" mode before the resumption of the next move.

The recent price movement indicates that the index is tracing out a "contracting triangle" pattern. A breakout from this pattern is likely to push the index to the next target zone of the 2030-2040 range.

Long-term view: The paucity of bullish momentum in the recent months is a cause of concern. The Nifty has to close above 2085 before any meaningful uptrend can take shape.

Till such time, the index would either drift in a sideways mode or seek lower levels. A close below 1880 would have bearish implications and could pave the way for a drop to 1800-1820 range.

SENSEX (6451.54)

Preferred view: The price pattern in Sensex was similar to that of Nifty. The index saw a zig-zag price action that was marked by a bout of alternating weak and strong close. This indicates indecision and could be a precursor to a sharp move in either direction.

The near-term trend appears positive and a move to the 6525-6550 range remains the preferred view. A drop below 6330 would, however, be a cause of a concern and could push the index to lower levels.

Comments: The stock market did not take cognisance of the positive development in the form of a softening trend in crude oil prices.

The weakness in the technology sector stocks and select old economy stocks kept the index at bay. The market action in the next few days would set the tone for the medium-term trend.

CNX IT (2643.75)

After touching a high of 2696 on Monday, the trend turned weak. This has not altered last week's view of a move to 2775-2800 range. Holders of long positions may place the stop-loss at 2570. Fresh exposures may be avoided.

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