Stay away from bottom-fishing

TECHNICALS

The market breadth was negative as the combined exchange figures were 682:3172. The capitalisation of breadth was also negative as the commensurate figures were Rs 689 crore:Rs 13,537 crore.

The attrition was led by the banking sector and followed by the midcap stocks. Since midcaps are a barometer of retail risk appetite, the outlook in the near term appears to be that of overhead supply.

The indices have closed at the lower end of the intraday band, that too with negative market internals. The 3970 / 4110 range specified for Tuesday was easily violated as the Nifty closed significantly lower than the support specified.

The coming session is likely to witness a range of 3700 on declines and 3960 in case of advances. Traders may note the falling daily ranges which indicate a lower top and bottom formation on the charts.

The bearish pivot for the session will be the 3915, below which the bears will continue to remain in charge of near term sentiment.

The outlook for the markets on Wednesday is that of absolute caution as the 3848 swing reversal support stands violated and the draw-down is open till the 3700 level in the near term. Bottom fishing by short-term traders in this market scenario should be avoided at all costs.

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.