Near-term sentiment under pressure

TECHNICALS

The markets signed off the August derivatives series with a negative bias as my worries of poor volumes and lack of buying support on upthrusts emerged to the fore. The traded volumes were higher as the day traders pressed sales relentlessly.

The market breadth was expectedly negative as the combined exchange ratio was 1192:2650. The capitalisation of breadth on a commensurate basis was also negative as the figures were Rs 3,779 crore:Rs 13,209 crore.

The indices have closed at the lower end of the intraday range even as the closing was at it's lowest since July 29, 2008. That the volumes perked up adds to the weight of evidence that the near-term outlook remains under pressure. The 4345 / 4220 range specified for the session was violated as the index violated the support even on a closing basis.

The coming session will witness a range of 4280 on advances and 4140 on declines. The bearish trigger for the session will be 4240, below which the bears will remain in charge. On the flip side, a consistent trade above 4265 will see some pullback.

The market internals indicate a higher turnover as the participation levels rose due to the rollover process and day trading opportunities.

The outlook for the coming session is that of abundant caution as the weekend factor will keep the bullish aspirations under check. 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.