The Hindu Business Line : Momentum wanes in Nifty

Preferred view: The expected short-term correction materialised during the week. This was reflected in the form of a lacklustre activity, and the Nifty remained unchanged on a week-on-week basis.

Contrary to the strong bullish undertone witnessed in earlier weeks, the index has been stuck in a trading range and there has been a conspicuous drop in momentum.

As there are no signs of completion of the correction, the continuation of this phase would be the favoured view.

The index could retest the recent swing low of 2303. A close below 2300 would impart further weakness and a subsequent drop to 2230-2240 cannot be ruled out.

On the upside, the immediate resistance is at the 2390-2400 range, followed by the 2430-2440 range.

A sharp reversal in price may take shape if the index manages to hit the crucial resistance zone at 2430-2440 and fails to close above it.

Comments: The completion of a "Doji" pattern in the Japanese candlestick charts is a cause of concern.

It is a sign of indecision; the occurrence of the pattern in the weekly price chart could have bearish implications if the index fails to record a weekly close above 2387 next week.

A weekly close below 2300 could result in the formation of an "Evening Doji Star" pattern that could have bearish implications.

The price movement during the week would provide crucial evidence about the likely direction of the market in the near term.

Investors may continue to book profits on every rally, especially in the frontline index stocks.

A prolonged spell of correction may not be too far off.

As observed in earlier weeks, the long-term bullish view remains intact. The index appears to be on course to eventually move to the target zone of 2550-2600.

Investors may consider fresh exposures as and when fresh "buy" signals are triggered.

SENSEX (7767.4)

Preferred view: Except for a modest weekly gain of 14 points, the movement in the Sensex was no different from that of the Nifty.

The corrective phase witnessed in the past few days is likely to persist during this week as well.

Only a close above 7900 would impart bullish momentum.

Till such time, a test of the immediate support level of the 7450-7500 range would be the preferred view.

CNX IT (3015.1)

Similar to other market indices, the CNX IT index, too, was confined to a narrow trading zone. The expected drop to the 2950-2960 range materialised when the index logged a low of 2968 on Tuesday.

The short-term trend remains bearish and a test of the recent low of 2830 appears likely.

The bearish trend would be negated if the index closes above 3110.

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