Measured upmove on currently

TECHNICALS

The markets opened with an optimistic tone and ended Wednesday with gains as bulls tightened their grip on the sentiment.

The benchmark indices gained under 0.50 per cent as the winning streak continued for the fourth day in a row.

Traded volumes were slightly higher than Tuesday's figures and that is a sign of optimism.

The breadth was positive as the ratio of advancing shares to declining shares on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) combined stood at 1,783 : 1,075.

The capitalisation of the breadth was also positive as the numbers on the two bourses taken together stood at Rs 2,973 crore (advances): Rs 1,968 crore (declines).

Derivatives data for the previous session show a minor improvement in the traded volumes and a healthy build up in the open interest in the futures segment.

The indices have managed to inch higher as I have been advocating that the upmove is likely to be a measured one rather than a runaway rally.

The immediate hurdles for the indices are at the 1669 and the 5324 levels in the absolute short term on the Nifty and the Sensex, respectively.

Once these levels are surpassed with higher volumes, the bulls are likely to get support of the retail players who will enter the fray after these significant recent highs are surpassed.

The upsides after that confirmed breakout will be 2 per cent in the near term. On the lower side, expect intraday support at the 1634 and the 5272 levels in the coming session.

Traded volumes must be monitored very closely as the key to the sustainability of the upmove will be the volumes.

The outlook for the markets on Thursday is that of optimism as the bulls are likely to remain in control and barring profit taking at higher levels or adverse news flow from overseas markets, the outlook will remain positive. The technology, textiles, mid caps, energy and select automobile counters will continue to attract trader interest.

Stock specific activity is likely to be seen in Tata Motors, BHEL, Infosys, Reliance and Gujarat Ambuja Cements.

Traders should initiate trades on the long side only till the markets indicate otherwise and trade on lower volumes.

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.