Bull support seen at lower levels

TECHNICALS

The markets opened on a firm note and proceeded to consolidate the previous day's gains. Traded volumes were thinner compared with the previous session as well as the 10-day average.

The market breadth was positive as the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) combined figures were 1566 : 997 and the capitalisation of the breadth was also positive as the figures on a BSE & NSE combined basis were Rs 5,069 crore : Rs 1,264 crore.

The derivatives data available for the previous session shows a rise in open interest as the outstanding longs have increased by 4 per cent.

The indices are now above the short-term congestion levels and are appearing to attempt a breakout in the near future, subject to a confirmatory rally on the indices.

The Nifty is likely to encounter resistance at the 1828 - 1832 band and the Sensex at 5735 levels in the immediate future. The support at the downsides will be seen at 5635 and 1778 levels in the coming sessions. The outlook has improved undeniably.

The outlook for the markets on Thursday is that of cautious optimism as the bulls are likely to lend support at lower levels, should all other factors remain equal. The action is likely to be seen in cement, banking, automobiles and select technology counters.

I continue to advocate the Nifty short combinations and previous positions can be held. Avoid large exposures in the markets as of now, in view of the high volatility.

Vijay L Bhambwani
( Ceo - BSPLindia.com )

The author is a mumbai based investment consultant and invites feedback at vijay@BSPLindia.com or (022) 23400345 / 23438482.

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