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| The traded volumes were marginally higher than the previous session and in line with the 10 day average. The market breadth was negative as the advances to declines figures on the BSE & the NSE combined stood at 981 : 1548. |
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| The capitalisation of the breadth was highly positive at Rs 4,898 crore : Rs 1,575 crore on the two exchanges taken together. This shows broad-based weakness in the undertone and a buying momentum limited to the index heavy-weights to prop up the indices. |
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| The indices have taken support at the 1507 & 4725 base which I had advocated and that is a sign of temporary comfort to the bulls. |
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| A corrective rally was in the offing as the short-term momentum oscillators were in the oversold zone. However, absolute caution is advised as the undertone is brittle and relief rallies tend to terminate abruptly. |
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| Traders need to watch the 1500 and 4720 levels on the Nifty and Sensex respectively in the coming two sessions for signs of stability. |
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| On the upsides, expect the resistance to come at the 1562 and 4834 levels. Watch the price / volume action for directions in the short term. |
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| The outlook for the markets on Monday is that of cautious optimism as the players are unlikely to rush and commit funds on the buy side. |
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| The coming week being a truncated one, and also the expiry of the November series, expect cautiousness to be omnipresent. |
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| Sector wise activity is likely in the automobile, steel, energy and power segments. The derivatives segment shows a larger tendency to offload positions in the futures segment and buy in the options segment. |
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| That shows the bulls going on the back foot. Further, the for every two contracts squared up in the November series, less than one contract is being bought in the December series. |
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| That shows a net reduction of long positions in the markets. A clear sign of concern. |
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| Trades must be initiated on lower volumes and fewer counters must be traded with tight stop losses. |
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| Vijay Bhambwani |
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| CEO, BSPLindia.com |
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| The author is a Mumbai-based investment consultant and invites feedback at vijay@BSPLindia.com or (022) 23400345 / 23438482. |
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| Sebi disclosure: The analyst has no exposure to the scrips mentioned above. |
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