The markets opened on a cautious note and proceeded to sink lower as the session progressed. The top heavy nature of the market was evident to screen traders as the traded price of the first month futures deviated from the average traded prices of the day by a significant margin.
The market breadth was negative as the BSE breadth was 1,262 : 2,624. The capitalisation of the breadth was also negative on a commensurate basis as the figures were Rs 4,000 CRs : Rs 12,736 Crs.
The markets have closed at the lower end of the intraday range on higher volumes — signs of weakness. The 4,520-4,420 range advocated for Wednesday was violated even on a closing basis. The coming session is likely to witness a range of 4,450 on advances and 4,330 on declines.
That indicates a declining daily range. The bulls will need to defend the 4,430 level vigorously if the uptrend is to persist. On the flip side, a decline below the 4,415 level on a consistent trading basis will see the bears gaining further ground.
The market internals indicate a higher turnover as the participation levels rose in spite of the weakness. The number of trades increased and the average ticket size was higher, indicating a higher selling bias. The capitalisation of the market was lower in line with a downtick session.
The outlook for the markets on Thursday is that of absolute caution as the they are likely to be nervous on frugal bullish support. Big-ticket exposure should still be avoided for now.
Vijay L. Bhambwani
(CEO – BSPLindia.com)
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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.