Affording channel top comfort

TECHNICALS

The markets opened on a shaky note and proceeded to trade laterally through Tuesday. The benchmark indices closed almost flat after mid-day selling was contained by the bulls.

The traded volumes were subdued compared with Monday's session.

The market breadth was slightly negative as the ratio of advancing to declining shares on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) combined stood at 1543 : 1588.

The capitalisation of the breadth was positive as the figures on the two bourses taken together stood at Rs 10,748 crore: Rs 3,342 crore.

The indices have managed to close above their channel tops and that is a sign of comfort.

The immediate support for the short-term momentum traders will be at 1982 and 6282 levels on the Nifty and Sensex, respectively, which I have been advocating since a few days.

Should these levels not be violated downwards, the uptrend is likely to remain intact.

On the upsides, the 2012 and 6386 levels will be the resistance areas which need to be surpassed with high volumes to signal a fresh upmove.

Traded volumes must remain higher to signal retail participation.

The outlook for Wednesday is of optimism as the overall trend remains good.

Mahindra & Mahindra is likely to see activity as the scrip shows higher than market strength in the short-term charts.

Buying is recommended in the cash and derivatives segments with a patient perspective of a few weeks.

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.

Sebi disclosure: the analyst has no exposure to the scrips mentioned above.