The markets flattered to deceive the bulls as the higher levels experienced distribution from short term players. The same is confirmed by the "daki" formation on the daily oriental chart of the Nifty spot. The market breadth indicated weakness as the BSE & NSE combined market breadth was 1814:1926. The capitalisation of the breadth on a commensurate basis was negative as the figures were Rs 5,080 cr:Rs 8,885 cr. The turnover was lower than the previous session, which is a negative indicator for the first session of the week.
The indices have closed in the lower end of the intraday range and on negative internals and lower volumes. These are signs of overhead supply as short term players are preferring to opt out of long positions. The Nifty intraday range was within the suggested range of 3150 / 3020 levels as the support has held. The coming session is likely to witness a range of 2930 on declines and 3125 on advances. The bulls will have to keep the Nifty spot trading above the 3100 levels to dominate the session. Alternately, the bears may return below the 3000 levels if the decline is on forceful volumes..
The market internals indicate a lower turnover as the participation levels fell due to the weakness. The number of trades decreased and the average ticket size was lower, indicating a feeble buying bias. The capitalisation of the market was lower in line with a downtick session.
The outlook for the market on Tuesday is that of guarded optimism as the bulls need to make their presence felt to force the bears to cover their shorts.
Vijay L Bhambwani
(Ceo - BSPLindia.com)
(The author is a Mumbai-based investment consultant)