Political events call for abundant caution

TECHNICALS

The markets opened with a gap up due to strong overseas cues and ended with 1.5 per cent gains as the bulls managed to hold their new-found initiative. The traded volumes were lower and that is a sign of scepticism as the retail segment abstained from spirited buying support.

The market breadth was negative as the BSE advance decline stood at 1169:1362. The capitalisation of breadth was positive as the combined exchange figures were Rs 9409 crore:Rs 4584 crore.

The indices have closed at the upper end of the intraday band as the bear squeeze persisted till the fag end of the session. The market internals remaining negative on an uptick session and poor volumes remains a minor cause for concern - clarity is likely to emerge after the political situation is clear.

The intraday range for Monday advocated at the 4210 / 3975 held as the Nifty traded within these parameters. That indicates a truncated daily range.

The coming session is likely to witness a range of 4230 on advances and 4025 on declines. The bullish pivot for the session will be the 4130, above which the spot Nifty must remain to be bullish. On the flip side, the bearish pivot will be 3990, below which the bears will return with force.

The market internals indicate a lower turnover as the participation levels fell due to the gap up opening. The number of trades decreased and the average ticket size was lower, indicating a weak buying bias.

The outlook for the markets on Tuesday is that of abundant caution as the market players are likely to await the political results. I suggest trading light on Tuesday.

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.