Lack of buying conviction to haunt Nifty

TECHNICALS

The expiry day witnessed a negative session even as the rollover was a tame affair. The indications were of a lack of buying convictions even at lower levels. The market breadth was negative as the combined market breadth of BSE & NSE 1256:2543.

The capitalisation of the breadth on a commensurate basis was also negative as the figures were Rs 5,611 crore: Rs 14,649 crore. The technology sector remained an underperformer even in the wake of a falling rupee — indicating a drag on the benchmark indices in the days to come. The sector is represented well in the indices and may give an impression of a market more weaker than it actually is.

The indices have closed in the lower end of the intra-day band on negative market internals, which indicate a cautious undertone. The 4220/4100 range specified for Thursday was violated on the downside as the Nifty fell through this. The coming session is likely to witness range of 4170: 4210 on advances and 4040 on declines. The market internals indicate a higher turnover as participation levels rose due to the expiry. The capitalisation of the market was lower in line with a bearish session.

The outlook for the markets on Friday is that of cautious optimism, as the weekend session will see muted optimism. Being near the oversold zone, avoid pressing fresh short sales 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.