Lack of interest at lower levels

TECHNICALS

The markets opened on a cautious note and proceeded to trade lower through Monday.

The benchmark indices lost under a per cent and the undercurrent was distinctly nervous.

The traded volumes were significantly lower as the players showed a lack of interest even at lower levels.

The market breadth was highly negative as the ratio of advancing to declining shares on the Bombay Stock Exchange and the National Stock Exchange combined stood at 1239 : 1956.

The capitalisation of the breadth was also very negative as the figures on the two bourses taken together were Rs 2,062 crore (advances): Rs 3,117 crore (declines).

The indices have seen a fall and the lower tops and bottoms formation is underway.

The immediate support on the downsides will be at 2034 / 6475 levels on the Nifty and the Sensex, respectively, in the coming session.

Should these levels be violated, the markets may see sharper falls in the absolute short term.

On the higher side, expect resistance at 2068 levels on the Nifty in Tuesday's session.

Traded volumes must see a quantum jump if the retail participation is to return to the markets.

The outlook for Tuesday is that of caution as the bulls are unable to pull up the markets significantly.

There is a rangebound bias and as long as the 2080 levels are not surpassed by the Nifty on convincing volumes, I do not foresee a sense of bullishness returning to the markets.

The most judicious approach would be to wait and watch and let clarity emerge on the trend determination front before taking a fresh view on the markets.

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.