After opening on a brittle note, the bourses proceeded to trade lower through Tuesday.
The benchmark Bombay Stock Exchange (BSE) sensex ended the day at 3174.86 (down 40.38 points) and the Nifty 50 at 1018.10 (down 13.40 points).
Traded volume stood at Rs 1,015 crore on the BSE and at Rs 2,413 on the NSE.
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The market breadth was slightly negative as the advances to declines figures on the two exchanges combined stood at 983 : 1012.
The capitalisation of the breadth was negative too, with the figures on the two exchanges combined being Rs 889 crore: Rs 2,528 crore.
The outlook for Wednesday is one of absolute caution as the global sentiment is down and the markets have been unable to hold on to their recent gains. The heavyweights are weak and therefore a secular upmove should be difficult in coming.
Stock-specific activity will be seen in Hind Lever as the scrip was advocated as the leading culprit to drag the markets lower and has lived up to the prognosis. The counter is likely to nudge Rs 140-142 levels and derivatives traders should buy put options on the counter in the near month series.
Wipro is another stock with a very weak outlook. Being a Nifty 50 heavyweight, the counter is likely to keep the index under pressure. Should the markets continue to be weak, expect the previous low of Rs 1215 to be tested.
Satyam Computer is one of the weakest software stocks around and all advances are therefore exit points. Derivatives traders are advised to buy put options on out-of-money strikes in the near-month series.
Traded volumes must be curtailed to preserve capital.
Vijay Bhambwani
CEO, BSPLindia.com
The author is a Mumbai-based investment consultant and invites feedback at vijay@BSPLindia.com.
Sebi disclosure: The analyst has no exposure to the scrips mentioned above.