Tech view: Derivatives expiry to weigh on near-term sentiment

The "daki" formation advocated yesterday as per oriental charts had the anticipated effect as the benchmark indices lost over 2 per cent. The fall was led by the banking and midcap stocks which led the attrition.

Indications are pointing towards unwinding ahead of the expiry. The market breadth indicated weakness as the BSE & NSE combined market breadth was 936:2763. The capitalisation of the breadth on a commensurate basis was also negative as the figures were Rs 687 cr: Rs 11,693 cr. The turnover was lower than the previous session, which shows trader withdrawal.

The indices have closed in the lower end of the intraday range on negative internals and lower volumes. The Nifty intraday range was within the suggested range of 3125/2930 levels as the thresholds held. The coming session is likely to witness a range of 2900 on declines and 3025 on advances.

Traders may note the falling daily range. The bullish trigger for the coming session will be the 3015 level. Alternately, the bearishness may extend below the 2980 levels if the weakness is on higher volumes.

The market internals indicate a lower turnover as the participation levels fell due to the weakness. The number of trades decreased and the average ticket size was lower, indicating a weaker buying bias. The capitalisation of the market was lower in line with a downtick session.

The outlook for the market on Wednesday is that of caution as the derivatives expiry, overseas cues and currency peg will weigh on the near term sentiments.

Vijay L Bhambwani, CEO, BSPLindia.com, is a Mumbai-based investment consultant