Expect profit taking on advances

TECHNICALS

The markets opened on a positive note and proceeded to trade lower through the day. The benchmark indices ended with minor changes as upsides continued to encounter unloading as was expected.

Traded volumes were higher than the previous session, which shows higher trader participation. The market breadth was positive as the BSE and NSE combined figures were 2140 : 1406 and the capitalisation of the breadth was also positive as the figures on a BSE and NSE combined basis were Rs 8334 crore : Rs 5012 crore.

The indices have closed at the lower end of the intraday movement, which indicates pressure on advances. That traded volumes were higher on a day when selling was prominently witnessed, indicates some unloading, with more to come in the absolute short term.

The 4107 resistance advocated for Wednesday was not even tested, which indicates a slowing down of the upward momentum. The support remained inviolate also as the session was an "inside day".

Short-term traders will find the key signals emerging from the keltner bands on the short term charts. Invariably, such formations lead to relatively bigger moves ( big for the intraday / swing traders ) and can be rewarding if played right. Watch the market breadth keenly in the coming session.

The outlook for Thursday is that of probable profit sales on advances as bulls are yet to show buying conviction since the last two sessions. Tread with caution on the long side.

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.