Bearish trend to continue

TECHNICALS

The markets opened on a bullish note and proceeded to trade sideways through the day. The benchmark indices closed with little change after trading below the previous session's close for a major part of the day.

The traded volumes were lower than the those of the previous session, as the indices traded in a narrow groove for most part of the day.

The market breadth was highly negative, as the BSE and the NSE combined figures were 1385 : 2280 and the capitalisation of the breadth was positive, as the figures on the BSE and the NSE combined basis were Rs 8932 crs : Rs 5662 crs. The F&O data for the previous session indicate a continued buying bias, as the net long positions went up by 2.75 per cent.

The indices have exhibited bar reversals, as the closing is lower than the opening, and the intraday peaks were the significant highs of the ongoing rally. The poor traded volumes can be attributed to a narrow rangebound trade and scepticism at higher levels.

The 4,249 intraday resistance specified for Thursday has held as the Nifty retraced from the 4,245 levels. The support at the 4,194 levels was violated by a narrow margin and that indicates a downward pressure on the daily ranges.

The coming session is likely to witness levels of 4,188 on declines and 4,258 on advances in case of an extension of the upmove. The markets are in a state of flux as the two bar reversals in rapid succession show on the daily charts.

The outlook for the markets on Friday is that of abundant caution as the weekend factor coupled with profit sales on advances will cap the upsides. Keep watching the traded volumes on uptick bars on intraday charts, preferably of 30 minutes compression. The pre-Budget period is likely to be laced with higher volatility.

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 the scrips mentioned above.