Relief rally likely in the absolute near-term

TECHNICALS

The capitalisation of breadth on a commensurate basis was positive too as the figures were Rs 15,286 crore:Rs 2800 crore. The derivatives data for the session indicated a lower turnover as the bull participation was truncated during the day.

The markets closed at the upper end of the intraday range as the bears preferred to cover shorts and lock in gains. The market internals were positive, which is a sign of a relief rally in the absolute near term. The 4545 / 4355 range advocated for Wednesday held as the Nifty retraced from the 4541 levels.

The coming session is likely to witness a range of 4570 on advances and 4480 on declines. The tight range is due to the small base effect of Wednesday's intraday range. The 4490 level will be a bearish threshold, below which the bears will continue to dominate the sentiment. On the flip side, a sustained trade above 4520 will see short covering.

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

The outlook for the markets on Thursday is that of caution as the bulls are failing to display a strong hand and may not support the market on declines. Avoid big ticket trades.

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.