Market internals point to a further decline

TECHNICALS

After opening on a bullish note, the headline indices drifted lower. The bulls displayed a lack of conviction, indicating the absence of leadership. The traded volumes were slightly lower as the participation levels shrunk on a gap-up opening.

The combined exchange market breadth was weak as the figures were 1814:2088. The capitalisation was slightly positive as the figures were Rs 12,153 crore:Rs 10,121 crore.

The indices have closed at the lower end of the intraday range and the negative market internals add to the weight of evidence of further declines unless spirited buying emerges soon. The 4960/4770 range specified for Wednesday was overcome on the upsides.

The Nifty traded above the resistance point as per western bar charts, though the close was significantly lower than the intraday high. But the oriental chart is clear, as it showed a "hakaishi" formation, which has negative implications.

The erstwhile support of 5050 will now be the immediate hurdle. The coming session is likely to see an intraday range of 4770 on declines and 4975 on advances. The 4948 level will be the bullish pivot. The market internals indicate a lower turnover as the participation levels fell.

The outlook for the markets on Thursday is that of caution as overseas cues will impact sentiment in the near term till the Fed meeting. Buying should still be deferred.

Vijay L. Bhambwani
(CEO- BSPLindia.com)

The author is a Mumbai-based investment consultant and invites feedback at vijay@BSPLindia.com

Mandatory disclosure: the analyst has no exposure to any scrip recommended above.