Bar reversals set out resistance lines

The markets opened on a steady note and proceeded to trade lower through the day. The benchmark indices lost as bulls pared exposure ahead of the impeding F&O expiry.

Traded volumes were marginally higher than in Tuesday's session in the cash segment.

The breadth was highly negative as the ratio of advancing to declining shares on the Bombay Stock Exchange and the National Stock Exchange combined stood at 1073 (advances): 2078 (declines).

The capitalisation of the breadth was also negative as the figures on the two bourses taken together stood at Rs 2,774 crore (advances): Rs 6,845 crore (declines).

The indices have ended lower with bar reversals as the closing levels are lower than the opening levels and the intra-day highs are also the significant highs of the upmove.

That implies that the intra-day highs are the immediate resistance levels in the coming session at 2053 and 6475 levels on the Nifty and the Sensex, respectively.

Only above these levels will the upmove start again. Support at lower levels will be seen at 2025 and 2014 levels on the Nifty and 6376 and 6352 on the Sensex in the coming few days.

Traded volumes must be monitored as downtick days must be accompanied by lower volumes if panic selling is to be averted.

The outlook for Thursday is of abundant caution as corrective sentiment may prevail for a short term.

Activity may be seen in Mahindra & Mahindra, which is seen retracing lower. Near term support exists at Rs 530 levels where buying support is expected to lead to a surge again. Buying is recommended in the cash and derivatives segments. The scrip is likely to test the previous highs.

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.