Ongoing uncertainty to hit sentiments

TECHNICALS

As was expected yesterday, the markets retraced from near the intraday resistance advocated at the 4230 levels as the bulls were unable their own at higher levels.

Though the closing was significantly higher than the 200 day SMA, the profit taking bias at higher levels was all too apparent. That the traded volumes spiked higher on a downtick day adds to the bearish pressure in the immediate future.

The market breadth was negative as the combined exchange figures were 1254 : 2468. The capitalisation of the figures were negative too as the commensurate figures were Rs 6047 crs : Rs 9820 crs.

The F&O data for the session on Wednesday indicated a fall in the net long positions as the bulls unwound ahead of the F&O expiry.

The indices have closed at the lower end of the session's range and made a key reversal on the western charts and an inverted hammer on the Japanese candle charts. That this is the second hammer in five sessions, indicating the tentativeness in the markets.

The market breadth being negative and the traded volumes spiking up on a down tick day add to the pressure on the near term outlook. The daily charts are indicating a lower tops formation on the benchmarks - indicating a possibility of the 200 day SMA being violated on the downsides in the near future.

The coming session is likely to witness an intraday range of 4205 on advances and 4025 on declines. Watch the fall below the 4050 very keenly for volumes and market breadth as the fall may gain momentum below this threshold.

The outlook for the markets on Friday continues to be that of caution as the weekend factor and the ongoing uncertainty in the sentiments are likely to keep the traders nervous. Big ticket trades 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.