Watch out for global signals

TECHNICALS

After opening with moderate gains, the markets closed lower as follow-up buying was sorely lacking. The now-familiar system of average traded price versus the actual traded price of the Nifty near-month futures signalled a palpable unwinding pressure on upthrusts. The market breadth was negative as the BSE market breadth was 1,234 : 1,354.

The indices have closed at the lower end of the intraday band on marginally negative market internals, which indicate a weak buying by the retail segment, especially on the small-cap counters. The 4,385-4,100 range specified for Monday was not tested in either direction as the benchmark indices were in a narrow stranglehold.

The coming session is likely to witness a range of 4,285 on advances and 4,160 on declines. The bullish pivot for the coming session will be at the 4,265 mark. As long as the Nifty spot remains below 4,245, the session may go to the bears. Follow-up buying is likely to be the mother's milk for any prospective upthrust. Watch the turnover figures keenly on upmoves for signs of bullish conviction.

The market internals indicate a higher turnover as the participation levels fell due to the weakness. The number of trades decreased and the average ticket size was lower, indicating a weaker buying bias. The capitalisation of the market was lower in line with a bearish session.The outlook for the markets on Tuesday remains that of caution as long as the overseas cues remain negative. Avoid fresh bullish initiatives.

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 recommended above.