Bear covering may provide cushion

TECHNICALS

The markets opened on a shaky note and proceeded to trade in a see-saw manner through the day. The benchmark indices ended with minor losses as the intraday peaks could not be sustained. Traded volumes were higher than the previous session due to the intraday opportunities for the high risk traders.

Market breadth was marginally positive as the BSE and NSE combined figures were 2126 : 1446 and the capitalisation of the breadth was also positive. The F&O data showed a continued buying bias as the bulls ramped up over 4 per cent in fresh long positions.

The indices have closed at the lower end of the intraday range and also logged a falling tops and bottoms formation on the short-term charts. The key reversal signals that I had pointed out yesterday have been reliable indicators of pressure on advances, which was exacerbated by the weekend factor.

The 3974 level pointed yesterday as a short"�term support has held as the Nifty managed to edge higher by the close and the average traded price has also been higher than the threshold.

The coming session will witness support at the 3957 level which needs to be watched carefully by the bulls in the absolute short term. On advances, the bulls may tend to book profits at the 4014 - 4019 levels.

The outlook for the markets on Monday is that of continued caution as the bulls appear to be refraining from buying whole heartedly on declines. Only organised bear covering will provide cushion on declines. Bottom fishing must be avoided 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.