| The markets opened on an optimistic note and ended the day with almost 1 per cent losses as bulls resorted to profit taking at higher levels. |
| Traded volume was marginally higher than the 10-day average and Monday's session. The breadth was negative as the ratio of advances to declines on the BSE and the NSE combined stood at 1:2.5. |
| The capitalisation of the breadth was also negative as the frontline index heavy-weights came under profit selling. The derivatives data available for the previous session shows a rise in open interest as the outstanding long futures positions have expanded ahead of the expiry of the July F&O series. |
| The indices have come off their intra-day highs which also happen to be the top end of the bearish sloping channel, which will be the immediate barriers on the upsides. |
| The intra-day hurdles in the near term will be at 1630 and the 5164 on the Nifty and Sensex, respectively. Unless and until these levels are cleared, I do not expect the indices to surge higher sustainably. |
| On the lower side, expect support at the 1584 and 5024 levels on the Nifty and Sensex, respectively. Traded volumes will remain the most reliable barometer of market moods in the near term. |
| The impeding expiry of the F&O settlement will also play a part in the trend determination as the rollover / unwinding takes place in the coming two sessions. |
| The outlook for the markets on Wednesday is that abundant caution as the markets have fallen from below their critical threshold levels, which shows a lack of buying conviction within the bulls. |
| The action is likely to be polarised around the index heavy-weights and frontline F&O counters. The most prudent approach would be to buy deeply OTM puts on the Nifty in the mid month series in minimal / small lots to insulate one self against a fall.
Vijay L Bhambwani |
| Sebi disclosure: The analyst has no exposure to the scrips mentioned above. |
Short on buying conviction
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First Published: Jul 28 2004 | 12:00 AM IST
