Long positions hint at optimism

TECHNICALS

The markets started trading on a shaky wicket and ended the day almost half a percentage point higher as index heavyweights lifted the market.

Traded volumes were higher compared with the previous session, but lower than the 10-day average.

The market breadth was marginally negative as the Bombay Stock Exchange and National Stock Exchange combined figures were 1217 : 1420.

The capitalisation of the breadth was positive as the combined exchange figures were Rs 5593 crore : Rs 2976 crore on the exchanges, respectively.

The derivatives figures available for Monday's session show a rise in outstanding long positions by about Rs 600 crore. That is a sign of optimism as bulls have chosen to enhance their commitments.

The indices have managed to end with net gains for the second consecutive day and the volumes have been marginally higher.

The short-term resistance levels remain at the 1875 and 5875 on the Nifty and Sensex respectively. The support on the downside will be seen at the 5780 and the 1835 levels.

The technology sector has turned weak again and that is likely to drag the markets lower as well. The boost will come from the banking, automobile and metals sector.

The outlook for the markets on Thursday is that of cautious optimism as the initial part of the session is likely to see a follow buying support of the previous session.

The upsides are likely to see selling pressure as bulls are on the defensive and lack conviction at higher levels.

Hold on to the Nifty straddles as the outlook remains range bound. Do not enhance exposure as volatility is likely to be higher.

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 author has no outstanding positions in any of the stocks mentioned above.