Positive internals merit cautious optimism

TECHNICALS

The capitalisation of breadth on a commensurate basis was positive too as the figures were Rs 11966 crore: Rs 6674 crore. The derivatives data for the session indicated a higher turnover as the bull participation improved over the previous session.

The markets have closed at the upper end of the intraday range as the bears continued to cover shorts and were aided by fresh buying from the bull camp. The market internals were positive, which is a good sign. The 4570 / 4480 range advocated for Thursday was violated on declines as the Nifty tested the 4392 levels.

The coming session is likely to witness a range of 4640 on advances and 4440 on declines. The wide range is due to the large base effect of Thursday's intraday range. The 4490 level will be a bullish threshold, above which the bulls will continue to dominate sentiment.

The market internals indicate a higher turnover as the participation levels rose marginally. The number of trades increased and the average ticket size was lower, indicating a weak buying bias on advances. The capitalisation of the market was higher in line with an uptick session.

The outlook for the markets on Friday is that of cautious optimism as the weekend factor may witness some profit sales on advances. Avoid shorts 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/s recommended above.