The bourses kicked off on a firm note and proceeded to trade higher throughout Wednesday.
The Bombay Stock Exchange (BSE) sensex ended at 3032.32 (up 34.94 points) and the National Stock Exchange (NSE) Nifty 50 closed at 958.65 (up 07.45 points).
The market breadth was slightly positive as the advances to declines figures on the two exchanges combined stood at 942 : 920.
The capitalisation of the breadth was also positive as the figures were Rs 1,870 crore: Rs 1,526 crore.
Traded volume stood at Rs 1,018 crore on the BSE, while it was more than double that on the NSE at Rs 2,393 crore.
Traded volume on the exchanges was slightly lower and that makes the current upmove uninspiring.
The indices have still to clear the immediate resistance levels which are at 978 and 3100 on the Nifty and the sensex, respectively.
The upmove has been made possible by frontline technology shares, which have seen short covering coupled with limited value buying.
The software upmove may run into a speedbreaker if outstanding derivatives contracts are anything to go by.
The upsides being limited in these scrips, the benchmark indices will also see limited climbs.
Long positions should, therefore, be treated very carefully. The outlook for Thursday is of cautious optimism as players seek direction from the global trend.
Traded volume needs to improve to infuse confidence in the current run. The breadth should be at least be 0.5 : 1 in favour of advancing stocks to confirm a secular upmove.
In stock-specific terms, Infosys has limited upsides above Rs 3,150 levels and will see nervous fund and individual selling capping gains effectively.
Hindustan Lever has seen short-covering with the company unwrapping its March quarter numbers.
The dividend yield factor will also result in some buying as long-term investors take positions.
However, technicals do not justify a level above Rs 154. Going short at these ranges is advocated for derivatives players. Keep the traded volumes under check to avoid whipsaws.
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.
