Market internals reveal weak undertone

TECHNICALS

After opening on a positive note, the markets flattered to deceive as the closing was significantly lower than the opening. The traded volumes were insipid as the trader participation was lacking. The market breadth was expectedly negative as the combined exchange figures were 1464:2358.

The capitalisation of the breadth on a commensurate basis was also negative as the figures were Rs 2,576 crore:Rs 9,276 crore. The pre-expiry rollover process failed to have the desired effect on the turnover, indicating a weak undertone.

The indices have closed at the lower end of the intraday range as the weakness prevailed till the fag end of the session. That the market internals were negative add to the weight of evidence pointing to overhead supply in the absolute near term.

The 4380 / 4245 range specified for the session held as the index gyrated within these parameters. The coming session will witness a range of 4345 on advances and 4220 on declines. The bearish trigger for the session will be 4310, below which the bears will remain in charge.

The outlook for the coming session is that of mild choppiness associated with an expiry session. The fibonacci level of 4360 assumes significant importance as the bulls will need to keep the Nifty above this threshold for a fortnight if the markets are to rally. Traders should desist from the high-risk activity of trading against the grain by initiating fresh longs.

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.