Keep off long positions for now

TECHNICALS

The markets headed down today as the follow-up buying concerns expressed yesterday turned into reality. The traded volumes spiked higher as the unwinding accelerated. The market breadth was negative as the BSE and NSE combined figures were 1492 : 2387.

The capitalisation of the breadth was negative as the commensurate figures were Rs 5,530 crs : Rs 13,290 crs. The F&O data indicated a higher turnover as traders participated in the volatility and bears covered marginal shorts on the Nifty.

The markets have closed at the lower end of the intraday band and with higher volumes and negative internals. These are indicators of profit sales after a big upmove on Monday. The intraday range specified at the 4,680-4,540 for Tuesday was violated as the intraday low was below this support.

The coming session is likely to witness a range of 4,630 on advances and 4,450 on declines. The 4,630 will be a meaningful resistance as this level coincides with a significant resistance point as per Delta trading systems. The bullish pivot for the session will be the 4,600 level, above which the Nifty spot must close to indicate bullishness. On the other hand, a consistent trade below the 4,570 will be a negative indicator.

The market internals indicate a higher turnover as the participation levels rose due to the weakness. The capitalisation of the market was lower in line with a downtick session. The outlook for the markets on Wednesday is that of continued caution as the bulls are on the ropes. Avoid 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/s recommended above.