Weak internals call for caution

TECHNICALS

The indices experienced a free fall in the latter half of the session. The traded volumes spiked higher, which is a sign of concern. Overseas cues added to the bearish fires.

The market breadth, which was at 139:2657, underscores panic in the retail/bull camp. The capitalisation of breadth was also downright negative as buying was conspicuous by it's absence.

The indices closed off their intraday lows due to short covering in the last half an hour of trade. But they still closed at the lower end of the daily range, that too with significantly bearish market internals.

The Gann swing charts indicate a three bar bearish pattern (Thursday is counted as an "inside" day) and validates the mood bearing a bearish hue.

The specified support levels have been violated in a single session and the coming session will witness a range of 5480 on advances and 4930 - 4950 on declines.

The 4950 level is a major Fibonacci support and needs to be defended vigorously by the bulls if the market is to recover.

The outlook for the market on Tuesday is that of abundant caution and we suggest abstinence from big ticket trades in either direction, as clarity will emerge only after a few sessions.

Vijay L. Bhambwani
(CEO- BSPLindia.com)

The author is a Mumbai-based investment consultant and invites feedback at vijay@BSPLindia.com.