Bulls unlikely to give up initiative

TECHNICALS

The markets opened on a firm note and proceeded to extend the early gains through the day. The benchmark indices ended with over 1 per cent gains. The traded volumes were marginally higher compared to the previous session (partly due to the bulk deals).

The market breadth was marginally positive as the BSE and NSE combined figures were 1,869 : 1,508 and the capitalisation of the breadth was also positive as the figures on a BSE and NSE combined basis were Rs 10,538 crore : Rs 3,991 crore.

The F&O data for the previous session shows a rising PCR as the bears continue to press sales in the Nifty options.

The indices have managed to close at the upper band of the intra-day range, a pointer towards bullishness. The intra-day range of the Nifty spot is likely to be the 3,293.06 on the declines and 3,355.63 on the advances.

Beyond these thresholds, take a fresh look on the short term price projections on the Nifty. Qualitatively speaking, the positive market breadth is a heartening indicator and should the rally sustain with such continued momentum, the bulls will manage to hold the initiative.

It maybe remembered that historically, the expiry process is marked by squaring up of majority of the shorts and rollover in the long positions. This process is likely to ensure that the downsides will be due to profit sales alone and maybe capped too.

The outlook for the markets on Tuesday is that of continued optimism as the bulls are unlikely to relent in their market support ahead of the year-end. Barring routine profit sales, a major "sell" trigger seems conspicuous by its absence.

Stock-specific activity is likely to be seen on TVS Motors that is showing signs of strength for the medium-term players. A breakout above the saucer formation is seen on the charts and is a bullish trigger for the patient players.

Vijay L. Bhambwani
(CEO- BSPLindia.com)

The author is a Mumbai based investment consultant and invites feedback at vijay@BSPLindia.com  or ( 022 ) 23438482 / 23400345.

SEBI disclosure: the analyst has no exposure to the scrips mentioned above.