Bulls to remain in charge

TECHNICALS

The markets opened on a firm note and proceeded to trade marginally higher through the day. The benchmark indices displayed signs of fatigue as the rate of ascent was distinctly slower. The traded volumes were higher as the intra-day participation improved.

The market breadth was positive as the BSE and NSE combined figures were 2,000 : 1,404 and the capitalisation of the breadth was also positive as the figures on a BSE and NSE combined basis were Rs 8,907 crore : Rs 4,652 crore.

The F&O data for the previous session points towards a significant buildup of fresh positions as the bulls continue to support the markets at lower levels.

The indices have closed at the lower end of the intra-day range as the indices displayed a tendency to "regress towards the mean," as the bulls offloaded long positions at higher levels.

As expected, the 3,478-level on the Nifty mentioned on Monday as a short-term hurdle, above which the sentiments were likely to be bullish, was the intra-day inflection point.

The resistance mentioned on Monday at the 3,520-level was not tested as the upward momentum was seen slowing down.

The intra-day levels for the Nifty spot for the coming session are likely to be at the 3,455.72-level on declines and the 3,510.58-levels on advances. Traders must continue to monitor the market internals for signs of possible distribution, if any.

The outlook for the markets on Wednesday is that of continued cautious optimism, as the bulls are likely to remain in charge. Barring routine profit sales, a major sell off in the coming session is not expected.

Though the intra-day volatility may step up, the overall direction will be northwards. Stock-specific activity maybe seen on Bank of Baroda, which is showing signs of bullishness as the scrip has gained in value on higher volumes. Should the counter stay above the 235-levels ( the 200 day SMA ), the outlook is likely to be positive in the short to medium term.

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.

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