The system of average traded price vis-a-vis the current traded price of the Nifty futures mentioned yesterday, which had sent out a red alert about the impeding weakness, was on the ball.
The headline indices dropped further as the bulls remained conspicuous by their absence. The market breadth was negative as the BSE breadth was 1,108 : 2,757. The capitalisation of the breadth was also negative on a commensurate basis as the figures were Rs 1,622 CRs : Rs 13,896 Crs.
The markets have closed at the lower end of the intraday range on lower volumes, which should not be construed as a positive, since extended slides can occur on lower turnover. The 4,450-4,330 range advocated for Thursday was violated even on a closing basis as the Nifty spot closed below this threshold.
The coming session is likely to witness a range of 4,370 on advances (a Fibonacci level) and 4,190 on declines — a continued declining daily range. The bulls will need to keep the Nifty above the 4,350 level consistently if the uptrend is return.
The market internals indicate a lower turnover as the participation levels fell due to the weakness. The number of trades decreased and the average ticket size was lower, indicating a lower selling bias.
The outlook for the markets on Friday is that of absolute caution as the markets are unlikely to see concerted buying on a weekend session. Bottom-fishing should be avoided.
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.