Profit sales seen at higher levels

TECHNICALS

The markets opened on a weak note and turned on a dime as short covering pushed indices higher. The lower discount to cash points to a bear squeeze induced upthrust.

Traded volumes were lower than the previous session and the market breadth was positive as the combined exchange figures were 2397 : 1423.

The capitalisation of the breadth on a commensurate basis stood at Rs 11,825 crore : Rs 2,525 crore. The derivatives data for Wednesday's session indicates a fresh build-up of 2 per cent in fresh net longs.

The indices have closed at the upper end of the intraday range, that too with positive breadth. Lower traded volumes indicate a cautious undertone as the retail segment seems to have greeted the uptick session with some trepidation.

The intraday range advocated for Thursday at the 4440 / 4505 saw the Nifty test the lows as the intraday dip was till the 4445 levels. The rally and subsequent close past the 4505 threshold indicates a bullish undertone in force on Thursday. The 4440 support remaining intact was a relief for the bulls as the " 3 white soldiers" formation of the previous week was not pierced.

The coming session is likely to witness a range of 4565 on advances and 4470 on declines. Being a weekend session, there may not be a seizable addition to fresh aggressive longs - all things remaining equal.

The outlook for Friday is that of continued optimism, though higher levels may attract some profit sales from short-term players.

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.