Bigger directional move likely

TECHNICALS

The markets opened on a firm footing and ended with extended gains as the bulls managed to prevail over the bulls for the second session in a row.

But the weekend factor kept the traded volumes subdued. The market breadth was negative as the combined exchange figures were 1582:2522. The commensurate figures were Rs 9,236 crore: Rs 11,178 crore.

The indices closed at the lower end of the intraday range, albeit with net gains, even as the daily bar charts show an "inside" formation. This is a precursor to a bigger move in either direction.

The 5650/5850 levels held as the index did not scale either. The 5780 trigger advocated for Thursday was overcome on an intraday level, but not surpassed on a closing basis.

The coming session will witness an intraday range of 5810 on advances and 5723 on declines. As per the Japanese charts, the support for the Nifty spot is emerging at the 5635 levels ("Senkou span") in an overall "Kouten" formation. These are positive indicators for the bulls.

The outlook for the markets on Monday will be determined by the overseas cues and customary pre-expiry bear squeeze. Avoid big ticket trades till the 5875 - 5900 band is overcome on forceful volumes and a build-up in open interest.

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.