Traded volumes, open interest to show direction

TECHNICALS

The markets opened on a positive note and proceeded to trade in the green through the day. The benchmark indices gained marginally at close as the higher levels met with profit sales from the nervous bulls.

Traded volumes were lower than the previous session, which is a sign of lack of buying conviction. The market breadth was positive as the BSE and NSE combined figures were 2131 : 1391 and the capitalisation of the breadth was also positive.

The indices have closed at the lower end of the intraday range as the higher levels are proving to be exit points for the short term traders. As I have been advocating, rallies are appearing to be laboured and the poor volumes show skittishness in the bull camp in enlarging commitments.

The coming session is likely to witness an intraday range of 3777 on advances and 3693 on declines. Beyond these parameters, the traded volumes and open interest will determine just how much the markets are likely to gyrate. Keep watching the market internals in the coming days.

The Monday's session marked an "inside day" formation as the trading range was within Friday's intraday range. That is normally a precursor to a bigger move in the offing.

The outlook for the markets on Tuesday is that of continued optimism and the traders are advised to take smaller exposure and capitalise on bigger price swings to protect their capital from undue volatility shocks. When the markets are trending predictably again, bigger ticket trades maybe initiated.

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.

 Mandatory disclosure: the analyst has no exposure to the scrips mentioned above.