Positive on the channel front

TECHNICALS

The markets opened on a shaky note but proceeded to trade higher through Tuesday's session. The benchmark indices gained approximately 0.5 per cent.

The traded volumes were marginally lower compared with the previous session. The market breadth was positive as the ratio of advancing to declining shares on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) combined stood at 1752 : 1285.

The capitalisation of the breadth was negative too as the figures on the two bourses taken together stood at Rs 3,286 crore: Rs 4,920 crore.

The indices have closed with strength and are above their channels, which is a positive indicator.

The near-term resistance on the indices will be at 1894 and 6062 on the Nifty and the Sensex, respectively. The support on the lower side will be seen at 1869 and 5954 levels in the coming sessions.

The outlook for the near term trend has improved and the traded volumes need to perk up to signal the return of the retail players.

The outlook for the markets on Wednesday is that of optimism as the bulls are likely to retain control over the sentiments.

The boost is likely to come from the technology, commodities and textile sectors in the near term.

Stock-specific activity is likely to be seen in Tata Steel, which is showing signs of confirming a breakout above a crucial resistance level.

Buy in the cash and derivatives segments for the near term with a 2 per cent stop loss and upside target of 3-4 per cent. Traded volumes need to be curtailed for now.

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.