High profit sales bias disconcerting

TECHNICALS

The markets opened on a cheerful note and proceeded to trade firmly through the day.

The benchmark indices gained almost a per cent after late selling erased gains partially.

The traded volumes were in line with Friday's session.

The market breadth was slightly negative as the ratio of advancing to declining shares on the Bombay Stock Exchange and the National Stock Exchange taken together stood at 1353 : 1852.

This is a sign of concern as the profit booking bias was high.

The indices have closed on a bullish note and missed a close above the all-time highs on the Nifty as the 2120 levels eluded the bulls.

Once this level is conclusively overcome, the sceptism levels will subside and broad-based retail participation will be seen.

This threshold level will be the immediate resistance level to watch out for on an intra-day basis in the coming session.

Support on the downside will be seen at 2074 levels on the Nifty in Tuesday's session. Traded volumes and the market breadth must remain positive to signal a sustainable uptrend in the coming days.

The outlook for the markets on Tuesday is that of abundant optimism as the bulls are gaining the initiative and are likely to continue lending support at lower levels.

Short-covering is likely to cushion the downsides in the immediate future.

Among shares, activity is likely to be seen in Reliance Industries, which is exhibiting an inverted head and shoulders pattern "" a bullish sign.

Should the scrip trade consistently above Rs 552 levels with heavy volumes, expect a fresh breakout on the upsides.

Buying is recommended in the cash and derivatives segments above this confirmatory breakout.

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.