Overall upmove extended

TECHNICALS

The markets opened on a firm note and proceeded to trade in a see-saw manner through Wednesday as bulls preferred to pull out of long positions at higher levels.

The benchmark indices lost marginally and closed a shade lower. The traded volumes were marginally lower than in Tuesday's session.

The market breadth was negative as the ratio of advancing to declining shares on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) combined stood at 1057 : 1811.

The capitalisation of the breadth was also negative as the figures on the two bourses combined were Rs 2,365 crore (advances): Rs 3,637 crore (declines).

The indices have paused for a breather for the first time after the shortlived correction on Thursday last brought the markets down marginally.

The overall upmove has been extended and a correction is a healthy development in the markets.

The immediate support is at the 1668 and the 5394 levels on the Nifty and Sensex, respectively on an intra-day basis in the coming session.

The upsides are likely to see resistance at the 1695 and the 5454 in the coming session. The volumes need to be watched as the trend determination process will be determined by the price and volumes action in conjunction.

The boost is likely to come from the cement, pharmaceuticals and textile sectors. The banking and oil stocks may continue to remain underperformers.

The outlook for the markets on Thursday is that of cautious optimism as the bulls are likely to offer at lower levels, however, there maybe selling pressure at higher levels. In my opinion, the consolidation phase may last for 1-2 sessions further, before a secular upmove commences again.

Among stocks, action is likely in ACC as the counter is on the threshold of a breakout above it's short-term congestion levels. Any sustained trading above Rs 277 levels and a further 3-4 per cent upmove is likely. Buy in the cash and derivatives segments.

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.