Upmove hinges on follow-up buying

TECHNICALS

After opening on a strong wicket, the indices surged higher on the back of overseas cues and trader participation. The traded volumes remained steady due to the gap-up opening. The market breadth was positive as the combined exchange figures were 2590:1339.

The capitalisation of the breadth was positive as the commensurate figures Rs 14768 crore:Rs 1999 crore. The f&o data indicated a lower turnover as trader participation was lacking on advances.

The markets have ended at the upper end of the intraday band and closed at the highest level since 17/6/08. This is an optimistic indicator and needs follow-up buying to indicate a sustainable upmove. The intraday range specified at 4600 / 4420 for Monday was overcome as the Nifty spot managed to close above this threshold.

The coming session is likely to witness a range of 4680 on advances and 4540 on declines. The bullish pivot for the session will be the 4590 level, above which the Nifty spot must remain to be firm.

The market internals indicate a lower turnover as the participation levels fell due to the gap up open. The number of trades decreased and the average ticket size was higher, indicating a subdued buying bias. The capitalisation of the market was higher in line with an uptick session.

The outlook for the markets on Tuesday is that of continued optimism though the bulls are still hesitant about enhancing commitments on upthrusts. Avoid big purchases.

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.