Recent run-up shows signs of consolidation

TECHNICALS

The markets opened on a positive note and proceeded to trade in a narrow range through the day. The benchmark indices managed to end in positive territory in an otherwise lacklustre session.

The traded volumes were lower than the previous session as the weekend factor coupled with a tight ranged movement kept large scale intraday activity under check.

The market breadth was almost even as the BSE and NSE combined figures were 1686 : 1666 and the capitalisation of the breadth was positive as the figures on a BSE & NSE combined basis were Rs 6418 crs : Rs 4541 crs.

The F&O data for the previous session indicated a build of fresh short sales and a rising net long open interest.

The markets have consolidated after a decent run up and that indicates stronger hands taking over from the short-term players. The current correction has not seen a significant fall on a closing day-on-day basis, which underscores the optimism prevalent in the undertone.

The intraday range of 3319 / 3389 specified for the Friday's session was not even tested in any direction, which shows a quiet consolidation.

The coming session is likely to see intraday levels of 3387 on advances and 3311 on declines. Traders should continue to watch the market breadth and open interest for signs of trend determination in the absolute short term.

The outlook for the markets on Monday is that of cautious optimism as the bulls are seemingly tightening their grip on the markets.

The week has been a positive one and barring unforeseen circumstances and routine profit sales, the immediate future holds promise. Aggression on the contrarian side by way of short selling is best avoided and sticking to front-line counters will be a sound strategy in the near term.

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.