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B. Krishnakumar

Nifty (2090)

Preferred view: The market action was in line with last week's expectations. After an initial short-term corrective phase, the trend turned positive on Friday. The index sought support at the first support zone at 2060-2064 range. The outlook remains bullish and the Nifty appears set to move to the next target zone of the 2185-2190 range.

The only caveat is that the index has to close above the crucial resistance level at the 2100-2110 range. A close above 2110 would confirm the possibility of a rally to the 2185-2190 range. As observed last week, a sharp reversal may be expected if the index reaches this target zone in the June 10-12 time window.

The positive outlook would be in force as long as the Nifty holds above the support zone at 2025-2030. It remains to be seen if the expected upward move to the 2185-2190 range is the final move on the upside or a portion of an extended upward move. The momentum behind the rally in the ensuing days and the behaviour of key indicators at higher levels would provide a clue about the nature of the rally.

Sensex (6755)

Preferred view: Last week's view remains unchanged. The Sensex appears to be headed towards the target zone of the 6900-6950 range. The positive view would be blunted if the Sensex closes below 6500.

The recent movement in the index has further diluted the validity of the bearish "head and shoulder" pattern discussed in earlier weeks. This pattern would regain significance if the index were to close below 6300.

Comments: After an initial phase of weakness, the recovery in the software sector stocks along with a sharp recovery in Reliance Industries played a key role in imparting strength. The positive outlook for quite a few index stocks tends to support the overall positive outlook for the Sensex.

CNX IT (2912)

The stock resumed the upward move after the expected short-term weakness was completed on Thursday. The outlook appears bullish and the index could move to the 3050-3100 range. The outlook for key software stocks, including heavyweights such as Infosys and Satyam, appears positive. This lends validity to the positive outlook for the index.

CNX Mid Cap 200 (3022)

The short-term corrective phase appears complete. The index appears to have commenced the next leg of the upward move. It appears to be moving towards the target zone of 3150-3200 that was mentioned in the previous weeks. The positive view would be valid as long as the index holds above negative trigger level of 2920.

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