Heavyweights show signs of weakness

TECHNICALS

The markets opened on a weak note and ended the day with over a percent loss as bulls continued to pare positions at higher levels. Traded volumes were lower than the previous session and the 10-day average.

The market breadth was negative as the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) combined figures were 972 : 1625 and the capitalisation of the breadth was also negative as the figures on a BSE-NSE combined basis were Rs 1242 crore : Rs 3714 crore.

The indices have closed lower after a bullish day as I had forecast, the upmove has indeed been temporary and has flattered to deceive the bulls. The fact that traded volumes were lower on a falling day is a minor consolation as the markets may slide slowly rather than see a rapid fall.

The immediate support is likely at 1574 and 5012 on the Nifty and Sensex on an intra-day basis in the coming session. The upsides are likely to be capped at 1607 and 5088 levels. The index heavy-weights are showing signs of weakness and the indices are likely to be dragged lower by the old economy stocks.

The outlook for the markets on Monday is that caution as the bulls are likely to be on the back foot and expiry considerations will see unwinding rather than large scale rolling forward of positions.

SBI recommended as a short sell has achieved it's targeted price and can see a slight further fall to the 419 levels. Aggressive short-term traders can short sell in small lots on minor advances.

Vijay L Bhambwani
(CEO - BSPLindia.com)

The author is a Mumbai based investment consultant and invites feedback at vijay@BSPLindia.com or (022) 23400345 / 23438482.

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