The headline indices remained on a southward trajectory as the decline continued for the fourth session in a row. The screen-reading method continued to signal weakness even as the conventional indicator of positive cost of carry continued to mislead the retail players.
The market breadth was negative as the BSE breadth was 1,069 : 2,822. The capitalisation of the breadth was also negative on a commensurate basis as the figures were Rs 2,885 CRs : Rs 14,477 Crs. The F&O indicators were pointing towards a higher turnover as the traders participated on the way down.
The 4,370-4,190 range advocated for Friday held as the Nifty spot traded within these parameters and respected the advocated support. The coming session is likely to witness a range of 4,300 on advances and 4,120 on declines — a continued declining daily range. The bulls will need to keep the Nifty above the 4,275 level consistently if the trend is to reverse in the near term.
The market internals indicate a higher turnover as the participation levels rose due to 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 Monday is that of absolute caution as the indices have confirmed a head-and-shoulder top to the rally that commenced after July 17, 2008.
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.