The volume imperative

TECHNICALS

The markets opened on a firm note and proceeded to trade weaker through Thursday.

The benchmark indices lost marginal ground as bulls failed to lend strong support at lower levels. Traded volumes were relatively better compared with Wednesday's 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) taken together stood at 1551 : 1445.

But the capitalisation of the breadth was negative as the figures on the two bourses combined were Rs 2,333 crore (advances): Rs 6,059 crore (declines).

The indices have slid marginally and are just shy off their psychological threshold levels of 6000 and 1900 on the Sensex and the Nifty, respectively, which will be the immediate resistance level.

The support on the lower side will be seen at 5922 and 1862 levels on the Sensex and the Nifty, respectively, in the coming few sessions.

Traded volumes must rise in tandem with prices to signal a sustainable upmove and increased retail participation.

The boost is likely to come from the pharmaceuticals, textiles, energy and select mid-cap counters.

The outlook for Friday is of cautious optimism and bulls are likely to lend token support to the markets during the mahurat session in the evening.

I continue to back Tata Steel as a buy during the mahurat session as the counter is entering a lower resistance zone and may see further upsides of 2-3 per cent in the short term. Buying is recommended in the cash and derivatives segments in small lots.

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.