The markets rose in the first half, only to flatter and deceive the bulls. As I advocated yesterday, the bulls are losing grip of the markets in near term. The pattern indicated a strong "bull shakeout" formation as per DeVillier's studies and veteran traders are insulated from the temptation to get sucked into the trap. Market breadth was negative as combined exchange figures were 1070 : 2629. The capitalisation of the breadth was also negative and the commensurate figures were Rs 1580 cr : Rs 11171 cr.
The indices closed at the lower end of the intraday range and on marginally higher volumes. Coming on a downtick session, this indicates a distribution by the smart money segment. The 2775 / 2600 range advocated for Wednesday held as the Nifty traded perfectly within these levels, thereby validating our wave count. The coming session is likely to witness a range of 2725 on advances and 2520 on declines. The bullish pivot for the coming session will be at 2710 above which Nifty may turn positive and the bearish trigger will be below the 2675 mark.
The market internals indicate a higher turnover as participation levels rose due to the weakness. The number of trades rose and the average ticket size was higher, indicating a higher selling bias. The capitalisation was lower in line with a downtick session.
The outlook for the coming session is of caution as bulls at a significant disadvantage and unable to defend the falling daily ranges. Buying may be postponed unless strong triggers emerge to support such a move.
Vijay L Bhambwani
(CEO - BSPLindia.com)
(He is a Mumbai-based investment consultant)
