Volatility to continue in near term

TECHNICALS

The markets opened on a bullish note and proceeded to trade in a see-saw manner through the day. The benchmark indices slipped deep into the red before closing a tad higher over the previous close. Traded volumes were lower than the previous session and market breadth was marginally negative.

The BSE and NSE combined figures were 1735 : 1823 and the capitalisation of the breadth was also negative as the figures on a BSE & NSE combined basis were Rs 6235 cr : Rs 6433 cr.

The F&O figures for the previous session indicate a routine activity after rollover and the PCR remains above average on the Nifty.

The indices have closed at the upper end of the intraday band though the net gains were insignificant compared to the previous close. As was advocated over the weekend in this column, the 3885-3866 band which was expected to be hit on Monday was achieved as the Nifty tested 3856 on an intraday basis, thereby validating the Fibonacci count in use.

The coming session is likely to witness an intraday range of 4009 on advances and 3874 on declines in case of an extended fall. Keep watching the traded volume on every inflection point as smart money may be "fading" the moves and enticing the smaller players in whipsaws. Since the budget session is on, higher volatility is likely in the absolute near term.

The outlook for the markets on Tuesday is that of abundant caution the choppiness in the markets may increase and fresh commitments may not be forthcoming. I reaffirm my earlier view that capital preservation in these volatile times will be the best strategy for retail players with limited risk appetite.

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.