Consolidation round likely

Technicals

The derivatives settlement ended with profit taking at higher levels. Thursday's cash market session saw minor gains.

The breadth was largely negative and traded volumes were above the 10-day average. This was because trading activity was mainly towards squaring up of the high outstanding positions.

The Nifty is witnessing selling pressure in the 1345-1350 band, which it needs to surpass with high volumes and a positive breadth to signal the commencement of the next leg of the bull run.

The commensurate levels on the Sensex are 4256-4265. On the lower side support will be seen at 4160 and 1312 on the Sensex and the Nifty, respectively.

These levels should not be violated during the session on Friday to enable the bulls to carry over their long positions overnight.

The technology sector has been performing in line with my earlier advice and is leading the market from the front and is likely to continue doing so in the short run.

Mid-cap stocks are likely to see higher volume / volatility whereas the frontline stocks will see concerted buying by the institutional players.

The oil & gas sector is also likely to see follow-up buying support as the these counters are above their medium / long term buy triggers. The steel and automobile sectors may see some amount of profit taking at higher levels.

The outlook for Friday is of cautious optimism as the markets are likely to witness consolidation at present levels.

The high concentration margins in the F&O segment will spawn a wait and watch approach before fresh buying can commence in a significant manner.

Among stocks, the Infosys counter has cleared its 200-day SMA very convincingly and closed above it.

Having initiated long positions yesterday, traders and investors alike may await levels of Rs 4,000-4,050 before locking in gains.

Fresh buying by intra-day traders maybe initiated in small lots in the cash and derivatives segment. Low risk investors may execute bull call spreads on the counter in the near month series.

Wipro has closed above it's recent top of Rs 1,050 and should it remain above this short-term trigger, expect Rs 1,115- Rs 1,120 levels in the short term.

Buying is recommended in the cash and derivatives segments. Keep traded volumes under control due to high volatility.

Vijay Bhambwani

CEO, BSPLindia.com

The author is a Mumbai-based investment consultant and invites feedback at vijay@bsplindia.com.

Sebi disclosure: The author has no exposure in any securities mentioned above.