Keep a keen eye on traded volumes

TECHNICALS

The markets reacted to overseas triggers and ended lower as the short-term upmove witnessed a reversal. The market breadth was negative as the Bombay Stock Exchange market breadth was 760:1823. Qualitatively speaking, the decline was aggravated on Tuesday as the buying support was almost totally absent.

The banking and technology sectors witnessed a significant attrition as short-term bulls capitulated positions. These are signs of near-term pressure. The indices have closed in the lower end of the intra-day band on negative market internals. The 4285/4160 range specified for Tuesday was violated as the benchmark index closed below this threshold.

The coming session is likely to witness a range of 4190 on advances and 4050 on declines. The range is declining — indicating overhead supply in the near term. The bullish pivot for the coming session will be at the 4180-mark. The bearish pivot will be at the 4160, below which the session is likely to be a down tick one. Keep a keen eye on traded volumes.

The market internals indicate a lower turnover as the participation levels fell. 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 bearish session. The outlook for the markets on Wednesday remains is that of caution, avoid all fresh purchases.

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.