Bulls may unload at higher levels

TECHNICALS

The markets opened on a bullish note and proceeded to trade with strength throughout the day. The benchmark indices gained nearly 2 per cent as the bulls managed to extend the previous session's gains.

Traded volumes were lower than the previous session as scepticism was evident at higher levels. The bulls lacked buying conviction as short covering was more responsible than retail buying.

Market breadth was highly positive as the BSE and NSE combined figures were 2886 : 581 and the capitalisation of the breadth was also positive as the figures on a BSE & NSE combined basis were Rs 10929 cr : Rs 1303 cr.

The F&O data for the previous session show 1 per cent increase in net long positions as the bulls fished for bargains at lower levels.

The indices have closed at the upper end of the intraday range as the bulls managed to prevail over the bears till the fag end of the session.

The 3839 resistance advocated for the Nifty was overcome marginally as the Nifty spot closed at the 3843 after testing the 3855 on an intraday basis. The intraday range was clearly on the ascent as the support at the 3691 was not even tested on an intraday basis.

The coming session is likely to witness an intraday range of 3899 on advances and 3787 levels on declines. The indices have gained for two days in a row and the volumes on the upsides have been thin, paving the way for profit sales at higher levels.

The outlook for the markets on Friday is that of guarded optimism as the bulls may opt for profit sales at higher levels. The upsides may slow down as the Nifty spot approaches the 3866 level. Refrain from fresh aggressive 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.