The market breadth continued to remain negative as the combined exchange figures were 1365 : 2465. The capitalisation of breadth on a commensurate basis was negative too as the figures were Rs 7518 crore:Rs 10,386 crore.
The markets have closed at the median level of the intraday range as the bears opted to lock in gains at lower levels. The market internals were negative, which is a sign of continued weakness in the underlying sentiments.
The 4370 / 4635 range advocated for Tuesday held as the Nifty took support exactly at the specified level. The coming session is likely to witness a range of 4545 on advances and 4355 on declines.
The tight range is due to the small base effect of Tuesday's intraday range. The 4430 level will be a bearish threshold below which the bears will continue to dominate. On the flip side, a sustained trade above the 4470 levels will see more short covering.
The market internals indicate a higher turnover as the participation levels rose. The number of trades increased and the average ticket size was higher, indicating a concerted covering bias on declines.
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The outlook for the markets on Wednesday is that of caution as the bears are likely to continue booking profits on declines and cushion the falls to an extent. The process of floor finding is not over yet. Avoid aggressive trades.
Vijay L. Bhambwani
(CEO- BSPLindia.com)
Mandatory disclosure: the analyst has no exposure to any scrip/s recommended above.