On a precarious perch

Technicals

The bourses started off on a firm footing but closed out Thursday's session at significantly lower levels.

The Bombay Stock Exchange (BSE) Sensex wound up at 3668.91 (down 52.74 points over its Wednesday's close) and the National Stock Exchange (NSE) S&P CNX Nifty ended at 1152 (16.75 points lower).

The market breadth was negative as the ratio of advances to declines on the two exchanges combined stood at 962:1675.

Traded volume stood at Rs 1,486 crore on the BSE, while it was more than double that at Rs 3,720 crore on the NSE.

The capitalisation of the market breadth was also widely negative as the numbers were Rs 1,471 crore: Rs 3,680 crore on a combined basis.

The markets are finally seeing the much-awaited correction as the selloff in the last two hours of the trading session shows.

The outlook for Friday's trading is one of circumspection as it is a weekend session and the overseas markets are also weak.

The Nifty and the Sensex are unable to clear their hurdles at 1185 and 3760 that I have been advocating since a few days.

The indices are now precariously poised at their 13-day simple moving averages which may provide a short-term succour.

I would advise traders to exit from long positions on advances. Convert your positions to cash as far as possible.

Stock specific activity maybe seen on Mahindra & Mahindra, which has been recommended earlier in this column and has not disappointed traders and investors.

As long as the counter remains above Rs 175 levels, expect the bullishness to continue. Stay long in the derivatives and cash segment.

Vijay Bhambwani

CEO, BSPLindia.com

The author is a Mumbai-based investment consultant and invites feedback at vijay@bsplindia.com.

Sebi disclosure: The author has no exposure in any of the securities mentioned above.