Keep watch on open interest, traded volumes

The markets opened on a firm note and proceeded to trade sideways through the day. The benchmark indices gained under 0.5 per cent, as the bulls managed to hold on to their gains for the entire day.

The traded volumes were lower than the previous session's, as scepticism was seen at higher levels. The market breadth was even, as the BSE and the NSE combined figures were 1827 : 1828 and the capitalisation of the breadth was positive as the figures on the BSE and the NSE combined basis were Rs 7318 crs : Rs 4610 crs. The F&O data for the previous session were indicating covering at lower levels and thereby limited downsides.

The indices have closed at the median point of the day and that indicates an absence of large-scale buying enthusiasm in the bull camp. That the traded volumes were lower also adds to the minor concern.

As was pointed out over the weekend, an upmove did occur on Monday, but the lack of conviction is a cause for some concern. While a holiday in the US markets and scepticism at higher levels can be partly attributed to the muted rally, the fact remains that upsides are meeting with unloading from the wary short-term players.

Unless the bulls can carry the short-term players with them, a sustainable upmove appears elusive. The coming session is likely to witness an intraday range of 4182 on advances and 4148 on declines. Traded volumes and open interest need close monitoring, as the impeding expiry of the derivatives contracts and the budget are likely to be the major domo triggers in the immediate future.

The outlook for the markets on Tuesday is that of cautious optimism as the upsides may meet some profit sales from short-term players. Big ticket exposure must still be avoided.

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.