Profit sales from short-term players is likely

TECHNICALS

The markets consolidated after a major uptick session as was advocated yesterday. Traded volumes eased off as the bulls paused for a breather.

The market breadth was marginally negative as the combined exchange figures were 1666 : 2260. The capitalisation of the breadth on a commensurate basis was positive as the figures were Rs 14665 crore: Rs 6463 crore.

That indicates buying on select heavyweights by institutional players whereas the retail segment booked profits across mid / small cap counters.

The derivatives data for Wednesday indicated a 0.7 per cent drop in open interest, which is a sure sign of unwinding as the 4 per cent appreciation in indices should have ensured a higher capitalisation of the open interest.

The indices have closed at the upper end of the intraday range as the undertone remained optimistic but retail players preferred to pare exposure at higher levels.

As per William's studies, such a move is natural after a major upthrust day and bulls need to consolidate their hold on the markets before the directional move can occur. The intraday range specified for Thursday was not tested in either direction as the days range was truncated.

The coming session is likely to witness a range of 4695 on declines and 4785 on advances. Keep monitoring the traded volumes as well as the money flow indicator for signs of near term trend determination.

The outlook for Friday is that of optimism though being a weekend session, some more profit sales may be expected from the short-term players. Avoid big ticket purchases for now.

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. 

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