Confidence crisis grips markets

TECHNICALS

The markets ended the week under pressure, as was expected yesterday. The traded volumes were lower as the trader participation waned on weekend considerations. The market breadth was negative as the BSE & NSE combined figures were 1057:2830. The capitalisation of the breadth was negative as the commensurate figures were Rs 3428 crore:Rs 11,676 crore.

The markets have closed at the lower end of the intraday band, with lower volumes and negative internals. These are indicators of a crisis of confidence in the markets.

The intraday range specified at the 4620 / 4450 for Thursday was violated, with the Nifty closing below the support specified. The coming session is likely to witness a range of 4495 on advances and 4350 on declines - indicating a falling range.

The bullish pivot for the session will be the 4490 level, above which the Nifty spot must close to indicate optimism. On the other hand, a consistent trade below the 4460 will be a negative indicator.

The market internals indicate a lower turnover as the participation levels fell due to the weekend factor. The number of trades decreased and the average ticket size was lower, indicating a weaker selling bias. The capitalisation of the market was lower in line with a downtick session.

The outlook for the markets on Monday will be dependent on overseas triggers and oil in particular. Avoid aggressive longs for now.

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 recommended above.