Lower volumes remain a concern

TECHNICALS

The markets opened on a steady note and proceeded to gather upward momentum through the day. The benchmark indices gained almost 1 per cent as the bulls managed to tighten their grip on the markets. The traded volumes were a cause of concern as the numbers plunged on retail scepticism.

The market breadth was highly positive as the BSE and NSE combined figures were 2221 : 1007 and the capitalisation of the breadth was also positive as the figures on a BSE & NSE combined basis were Rs 7146 crs : Rs 1245 crs.

The F&O data for the previous session also points towards a 0.50 per cent reduction in net open long positions as the bulls have preferred to pare exposure at higher levels.

The indices have managed to close at the upper end of the intraday range and that too with a positive market breadth.

The poor volumes remain the only negative as the buying conviction seems to be lacking. This factor seems to indicate that the rally is on weak legs and long positions must be handled gingerly.

The intraday target of 2941 advocated for Monday's session has not been met as the Nifty spot retraced from the 2933 levels. The upward momentum is therefore appearing to slacken off.

The coming session is likely to see levels of 2970.29 as the exhaustion point on the upsides and 2863.51 on declines. The index is likely to climb slowly above the 2900 mark as the bulls are unwilling to enlarge their commitments on advances.

The outlook for the markets on Tuesday is that of continued optimism as the bulls are likely to offer limited support at lower levels.

Profit sales at higher levels will be seen and buying opportunities for intraday players will be available on the Nifty and select front-line counters in the coming session. Traders must initiate fresh trades on lower traded volumes as the volatility is still very high.

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.