F&O expiry to drive sentiment

TECHNICALS

The markets opened on a bearish note and proceeded to trade higher through the day. The benchmark indices gained approximately 0.80 per cent at close.

The traded volumes were significantly lower than the previous session as the buying conviction was conspicuous by it's absence.

The market breadth was highly negative as the BSE and NSE combined figures were 1020:2288 and the capitalisation of the breadth was positive as the figures on a BSE & NSE combined basis were Rs 7,226 crore:Rs 3,300 crore signaling a buying bias on front-line index counters on short covering.

The indices have closed at the upper end of the intraday range, albeit on lower volumes.

That is a bearish indicator for the near term trend. We foresee selling pressure emerging again at the 3039 level on the Nifty in the coming session.

The support is likely to be seen on the 2958 levels as was advocated on Friday (Nifty bounced from the 2955 levels on Monday). A sizable fall from this threshold level is a pointer towards further weakness.

It is imperative that the Nifty rally on higher volumes and shows an increase in open interest on the way up. Only then will a sustainable uptrend be established.

The outlook for the markets on Tuesday is that of choppiness as the expiry related demand/supply forces will dominate the sentiments in the near term.

Sectorally, technology may out perform the broader markets owing to relative strength and forex considerations. TCS will be a safer bet for the medium term players and small sized long positions maybe initiated in the cash and derivatives segment.

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.