Bear pressure likely to persist

TECHNICALS

The market breadth was negative as the combined exchange advance decline ratio was 1:3. The capitalisation of the breadth was negative too as the selling pressure was significant.

The markets have closed at the lower end of the intraday band as bulls were unable to stem the bearish tidal wave. The weak market internals indicate a further downside in the offing as selling wave was across the board.

The 4340 / 4185 range advocated for Tuesday was violated on the downwside, though the Nifty closed near its advocated support. The impending expiry of the June F&O series is likely to keep the sentiments subdued as bulls offer overhead supply in the process of exiting long positions initiated earlier in the settlement.

The coming session is likely to witness a range of 4280 on advances and 4100 on declines. As long as the Nifty spot remains below the 4215 levels, expect the bearish pressure to persist.

The outlook for the markets on Wednesday remains that of abundant caution and I continue to maintain my view that capital preservation should be the top priority for now. Selective buying may be contemplated near the Fibonacci levels of 3960-4000 levels on the Nifty.

Vijay L. Bhambwani
(CEO- BSPLindia.com)

The author is a Mumbai-based investment consultant and invites feedback at vijay@BSPLindia.com

Mandatory disclosure: the analyst has no exposure to any scrip/s recommended above.