It's time for small-size value buying

TECHNICALS

The decline continued for the fifth session in a row as the overseas cues clobbered the domestic indices into submission. The markets barely managed to avoid a lower circuit, not seen since October last year. The traded volumes picked up and the market breadth was negative as the BSE figures were 382 : 2,189. The capitalisation of the breadth was also negative as the bulls were absent yet again at lower levels.

The markets have ended off their intraday lows, though still in the lower end of the session’s range, indicating that the bearishness was likely to persist a while. The weak market internals indicate a scenario where significant bottom-fishing is yet to emerge.

The markets are in an oversold zone. The 3,685-3,345 range advocated for Friday was violated on the downsides as the Nifty closed below the support threshold. The coming session is likely to witness a range of 3,465 on advances and 3,100 on declines. The bearish pivot for the session will be the 3,310, below which the bears will rule the roost.

The outlook for the markets on Monday is that of caution, though long-term investors may start small-size value buying on frontline blue-chips.

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.