High volumes show rising optimism

TECHNICALS

The markets opened on a positive note and proceeded to trade with strength through the day. The benchmark indices gained over 1.25 per cent as the expiry witnessed the usual short covering as has been the trend over the years.

The traded volumes were higher than the previous session, which is a sign of optimism as the rally was on higher turnover. The market breadth was positive as the BSE and NSE combined figures were 2022 : 1591 and the capitalisation of the breadth was also positive as the figures on a BSE and NSE combined basis were Rs 10896 crs : Rs 5291 crs.

The derivatives data for the previous session witnessed an unusual build-up of over 1.5 per cent in fresh net long positions "� again a sign of optimism.

The indices have closed at the upper end of the intraday range and that too on high volumes. The market breadth being positive adds to the optimism in the undertone. The 4118 level specified as the intraday resistance was convincingly overcome and the Nifty has closed at its highest on the charts.

Coming on the back of an "inside day" formation on Wednesday, the session assumes that much more importance. The coming session is likely to witness an intraday range of 4189 on advances and 4107 on declines. Watch the traded volumes and open interest as these will be pointers to the immediate trends.

The outlook for the markets on Monday is that of continued optimism and barring unforeseen circumstances and routine profit sales, no major selloff is expected. Maintain a bias towards buying declines albeit in small lots.

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.