Bulls to dominate in near term

TECHNICALS

The markets opened on a bullish note and proceeded to extend the previous session's gains through the day. The benchmark indices rallied 3.5 per cent by close.

The traded volumes improved over the previous session as trader participation was higher. The market breadth was highly positive as the BSE and NSE combined figures were 2763 : 568 and the capitalisation of the breadth was also positive as the figures on a BSE & NSE combined basis were Rs 11364 crs : Rs 1627 crs.

The F&O data for the previous session indicates a rising open interest after a long gap, with bears adding short sales on advances. The traded volumes have remained constant.

The indices have closed at the upper end of the intraday range which points towards bullishness in undertone. The improved trading volumes indicate a qualitative improvement as the participation seems to be increasing.

The intraday exhaustion level indicated yesterday at the 2889 mark has been accurate as the Nifty spot closed at the 2890 level.

The coming session is likely to witness levels of 2790.86 in case of sharp declines with minor support existing at the 2841 levels. In case the uptrend extends itself, the upper targets are 2941 as a primary objective with 2990 as the exhaustion point for Monday.

The outlook for the markets on Monday is that of continued optimism as the bulls are likely to remain in force in the near term. Barring routine profit sales from short-term players, a trend reversal is not apparent on the short"�term charts as of now.

The implied volatility being near record highs, trades must be initiated with abundant caution and aggressive quantities must be avoided. Short-term players may unload ITC long positions partially, whereas medium-term players may continue to hold on.

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.