Nifty likely to witness range of 4100-3900: Bhambmwani

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Technical Analyst, Vijay Bhambwani:

The weekend session panned out as per my expectation. I had advocated a lack of buying conviction due to the weekend and weak overseas cues, the markets plunged in the last hour of trade. That is an indicator of nervousness in the undertone as risk appetite contracted. The traded volumes were lower as compared to the previous session, which is a routine indicator for a weekend session. The market breadth was negative as the BSE & NSE combined advance decline ratio was 1094 : 2699. The capitalisation of the breadth was negative as the BSE & NSE combined figures were Rs 3296 Crs : Rs 16470 Crs. The NSE lost Rs 79670 Crs in market capitalisation in a selloff that was fairly broad based, barring the technology sector which rallied on Infosys's numbers, thereby saving the day from deeper losses.

The indices have closed in the lower end of the intraday range, with negative market internals and lower volumes. These are indications of continued weakness in the undertone. The intraday range specified for Friday between the 4160 / 4000 was violated on the downside as the Nifty tested the 3976 before closing near our supports.

The coming session is likely to witness a range of 4100 on advances above which the 4130 maybe likely. Support is likely at 3900 on declines below which the 3870 level maybe likely. The bullish pivot for the session will be at the 4070 and the bearish pivot at the 4035 levels. Traders need to watch the activity beyond these thresholds respectively for intraday guidance.

The market internals indicate a lower turnover due to the lack of buying conviction. The number of trades were lower and the average ticket size per trade was higher, indicating a selling bias. The capitalisation of the market was lower in line with a downtick session.

The outlook for the markets today is that of caution as the bulls are on the ropes and maybe unable to manage a sustainable upthrust in the absolute near term.

Disclosure: The analyst has no exposure to the scrips recommended above.