Lead by the banking sector, the markets plunged over 2 per cent as the overseas cues clobbered the bulls. Traded volumes were lower due to weekend consideration as well as the weak undertone.
Market breadth was expectedly negative as the combined exchange figures were 1342 : 2501. The capitalisation of the breadth on a commensurate basis was highly negative too as there was nowhere to hide.
The indices have closed at the lower end of the intraday spectrum as the weakness persisted till the fag end of the session. The “inside day” formation that was suspected to be a harbinger of a big move did warn us yesterday that the markets were to make a decisive yet explosive move.
The 4510 / 4360 levels advocated as a range for Friday was violated on the downsides as the Nifty closed below the critical Fibonacci level of 4360. The coming session is likely to witness a range of 4425 on advances and 4250 on declines. Should a close below the 4250 levels be attained on high volumes, a head and shoulder formation will be confirmed with further bearishness.
The outlook for the markets on Monday is that of absolute caution as the bulls have lost initiative and the markets are under a bear hug in the near term. Avoid bottom fishing for trading plays.
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/s recommended above.