Bulls seem to be at a disadvantage

TECHNICALS

The market breadth was negative as the combined exchange advance decline ratio was 518:3390. The capitalisation of the breadth was also negative as the commensurate figures were Rs 599 crore:Rs 15,029 crore.

The indices have closed at the lower end of the day's spectrum even as the market internals remained extensively weak. As I had expected yesterday, the bulls remained on the ropes and the bears stepped up their offensive.

The 3950 / 4125 range advocated for Tuesday was violated on the downside as the index fell below the low threshold even on a closing basis. The coming session is likely to witness a range of 3775 on declines and 4020 on advances. If the Nifty trades consistently below 3960, the bearish outlook will extend further.

The market internals indicate a higher turnover as the participation levels rose due to the market declines. The number of trades increased and the average ticket size was higher, indicating an accelerated selling bias. The capitalisation of the market was lower in line with a downtick session.

The outlook for the markets on Wednesday is that of absolute caution as the bulls seem at a clear disadvantage. Should the overseas cues be negative, the weakness may deepen.

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.