Keep off big-size trades for now

TECHNICALS

The markets faltered at higher levels as the bulls failed to support values on advances. The traded volumes were steady and the market breadth was positive as the BSE & NSE combined figures were 2,530 : 1,349. The capitalisation of the breadth on a commensurate basis was also positive as the figures were Rs 11,296 Crs : Rs 4,606 Crs.

The markets have closed in the lower half of the intraday range on positive internals, and volumes still remain lower than the average. The oriental charts indicate a “gravestone doji” formation, which has negative implication for day/short-term traders. Scepticism will remain the bane for the bulls in the near term.

The 3,635-3,340 range advocated for Tuesday held as the Nifty traded within these parameters. The coming session is likely to witness a range of 3,620 on advances and 3,420 on declines. The bullish pivot for the coming session will be the 3,590, above which the bulls will dominate the bears. As long as the Nifty remains below the 3,550 level, the bears will have an upper hand.

The market internals indicate a higher turnover as the participation levels rose marginally due to the volatility. The number of trades increased and the average ticket size was lower, indicating a continued short-covering bias. The outlook for the markets on Wednesday is that of caution as the higher levels are bereft of follow-up buying support. Avoid big-ticket trades 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.