Brittle underbelly bared

Technicals

 The technology stocks were extremely weak which kept the markets depressed. The short term charts on the tech sector look precariously poised and could well be a drag on the indices during the next down ward correction.

 The volumes which have been a concern with me in the recent past were higher even as the market breadth was negative. This is clearly a worrying sign as the selling is accompanied by retail offloading which underlines the nervousness in the sentiments.

 The short term support on the Nifty will come at the 1218 in the immediate future. The resistance will remain at the 1253 and unless this inflection point is surpassed with higher volumes AND a positive market breadth, I expect this hurdle to be significant.

 The outlook for the markets on Wednesday is that of cautiousness as the undercurrent of weakness is showing more and more frequently.

 Should the Nifty continue to fall with higher volumes, book profits on at least 50 per cent of your outstanding long positions.

 Among stocks, State Bank of India will see support at Rs 420 levels and can be bought in that range with a stop-loss around Rs 415 for the short / medium term.

 Gujarat Ambuja Cements is in an intermediate uptrend and should see support at Rs 224 levels where buyers can enter long on the scrip in small lots.

 Trading should be initiated in very small lots only.

 Vijay Bhambwani

 CEO, BSPLindia.com

 The author is a Mumbai-based investment consultant and invites feedback atvijay@BSPLindia.com.

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