Volatility may precede F&O expiry nears

TECHNICALS

The markets bounce-back was on expected lines. The overseas cues, coupled with SEBI's soft statements on the p-note issue, sparked a bear squeeze which is customary on the eve of derivatives expiry.

The traded volumes spiked as day traders and retail players who were hitherto sitting on the fence joined in the buying frenzy. The market breadth indicated a bullish bias as the BSE data indicated a 3:1 ratio in favour of the bulls.

The capitalisation of breadth was also positive as buying was persistent till the fag end of the session.

The indices have closed at the upper end of the day's range, on the strength of positive market internals and higher volumes. The intraday range suggested for Tuesday at the 5075/5295 was easily overcome on the upsides as bulls dominated over the bears above the resistance threshold, accompanied with higher volumes.

The coming session is likely to witness a range of 5280 on declines and 5665 on advances.

The bulls need to watch the 5375 level, which should not be violated if the upward momentum is to sustain on Wednesday.

The outlook for the markets is that of continued optimism, though some profit sales may be expected at higher levels from short term players.

Expect higher volatility till the derivatives expiry on Thursday.

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 any scrip/s recommended above.