Upward momentum seen

TECHNICALS

The traded volumes were in line with Tuesday's session and that is a sign of optimism as the upsides have seen a continued volume momentum.

The market breadth was highly positive as the ratio of advancing to declining shares on the Bombay Stock Exchange and the National Stock Exchange combined stood at 2017 : 1142 and the capitalisation of the breadth was Rs 5,620 crore: Rs 2,614 crore.

The indices have managed to close near their intra-day highs as the outlook has improved over the past few sessions.

For the short-term players, the 2080 and 6636 levels on the Nifty and the Sensex, respectively, are becoming a reliable base from where support can be expected.

The upsides will see selling pressure at 2110-2118 levels on the Nifty and 6710-6725 levels on the Sensex.

Only after a breakout has been achieved with high volumes and a positive market breadth and open interest seen would a sustainable upmove commence. The bias is clearly for the bulls for now.

The outlook for the markets on Thursday is of optimism as the upward momentum is likely to continue barring unforeseen circumstances.

Follow-up buying coupled with short-covering maybe clocked.

Among stocks focus is likely to be on Reliance Industries, Tata Iron & Steel Company and Canara Bank, which are showing signs of strength on the daily charts.

Buying is recommended in the cash and derivatives segments for the short-term players. Traded volumes should be curtailed due to the higher volatility seen in the markets.

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.