The bourses switched on on a weak note but improved to end higher. The benchmark Bombay Stock Exchange (BSE) sensex ended Thursday at 3305.44 (up 49.36 points) and the National Stock Exchange (NSE) Nifty 50 closed at 1063.60 (up 16.20 points). Traded volumes were at Rs 1,264 crore and Rs 2,565 crore on the BSE and the NSE, respectively.
The market breadth was positive as the combined figures on the BSE and the NSE were 1139: 992. The capitalisation of the breadth on the two bourses combined stood at Rs 3,594 crore : Rs 228 crore.
The indices have taken support at their 200-day simple moving averages and that has become a short-term base for the markets. The resistance for the indices will be at 1075 and 3326 on the Nifty and sensex, respectively. The traded volumes still continue to languish and that is a sign of concern.
The oscillators on the short-term charts are showing signs of a revival and that indicates the possibility of the upward correction gaining momentum.
However, it maybe remembered that corrective rallies tend to terminate abruptly. The reversal in short term can be conclusively ascertained only above the 1083 and 3360 levels on the Nifty and sensex, respectively.
The outlook for tomorrow is one of cautious optimism as the markets are showing a delinking sign from the US markets. That may be the nascent stage of a pre-Budget rally.
However, volumes need to improve on the upsides. Stock-specific activity maybe seen in Reliance Industries above Rs 287, in Mastek above Rs 601, in Tata Steel above Rs 158 and in Wipro above Rs 1,475.
Satyam Computer is making a base at the Rs 215 level and likely to see a bounceback from these ranges. Derivatives traders may buy call options in Tata Engineering at a strike price of 170 and buy stock futures in Reliance above Rs 289. Keep traded volumes low, though.
Vijay Bhambwani
CEO, BSPLindia.com
The author is a Mumbai-based investment consultant and invites feedback at vijay@BSPLindia.com
Sebi disclosure: The analyst has no exposure to the scrips mentioned above.
