The markets opened on a shaky note and proceeded to shed weight through the day. Late selling saw the benchmark Bombay Stock Exchange (BSE) Sensex end the day at 3289.55 (down 47.76) and the National Stock Exchange S&P CNX Nifty at 1037.80 (14.30 lower).
The traded volumes were Rs 1,273 crore on the BSE and Rs 3,108 crore on the NSE. The market breadth was highly negative as the combined ratio of gainers to losers on the BSE and NSE was at 952:1534 and the capitalisation of the breadth was also negative at Rs 549 crore: Rs 3804 crore.
The indices have given back more than the gains registered yesterday, thereby snapping the four-day winning streak. What is noteworthy is the fact that the index has reversed from a three-month high which is also near the highest point in the current upmove.
This bar reversal (open being higher than the close) and high volumes shows that the 1060 levels on the Nifty are going to the short term definitive hurdle.
On the flip side, expect support at the 1020 levels give or take 5 points. The market breadth has been highly negative and that underlines the nervousness in the sentiment, as also the inherent weakness in the operator sentiments as they have rushed to book profits in a frenzy.
The outlook for the markets on Wednesday is that of cautiousness as the markets are likely to see more nervousness, though the overall trend remains bullish.
Stock-specific activity is likely in Bajaj Auto, which has turned bullish after it surpassed a short-term congestion and managed to rally on a bearish day. Stay long on the counter, as long as it stays above Rs 518.
ITC needs to confirm its bullish undertone by closing above Rs 726 for two consecutive days. Thereafter, it is in a buy zone.
Fresh bullish positions should be on light volumes as volatility is likely to be high.
Vijay Bhambwani
(CEO - BSPLindia.com)
The author is a Mumbai based investment consultant and invites feedback at vijay@BSPLindia.com
SEBI disclosure: The analyst has no exposure to the scrips mentioned above.
