Lack of conviction hampers buying

TECHNICALS

The traded volumes contracted as the weakness saw the retail players abstained from whole-hearted participation. The F&o data for the session indicated a lower turnover and the puts outpaced calls by a wide margin, which is an indication of bear pressure.

The markets have closed at the lower end of the intraday range as the bears continued to remain in command and bulls did not manage to put up a fight. The 4650 / 4510 range advocated for Thursday was violated on the downside even on a closing basis as the short pressure persisted. The coming session is likely to witness a range of 4565 on advances and 4430 on declines. The 4525 level will be a bearish threshold, below which the bears will continue to dominate the sentiment on Thursday.

The market internals indicate a lower turnover as the participation levels fell due to the weak undertone. The number of trades decreased and the average ticket size was lower, indicating a lack of buying conviction. The capitalisation of the market was lower in line with a downtick session.

The outlook for the markets on Friday is that of caution as the bulls are on the back foot and the weekend factor may keep buying exuberance at bay. Preserve capital as a first priority.

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.