Nifty likely to witness range of 5575-5450: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened on a firm note and ended the session with gains as the bulls kept the Nifty above the 5450 bullish pivot. The benchmark indices ended with approx 1.2 % gains at close. The traded volumes were lower as compared to the previous session, which is negative indicator for a bullish session. The market breadth was positive as the BSE & NSE combined advance decline ratio was 2821 : 1488. The capitalisation of the breadth was positive as the BSE & NSE combined figures were Rs 9882 Crs : Rs 4847 Crs. The NSE gained Rs 77325 Crs in market capitalisation.
The indices have closed in the upper end of the intraday range as the bulls were able to support the markets at lower levels. The intraday range advocated for the Nifty between the 5525 / 5375 has held as the Nifty trended within these levels - thereby validating our intraday wave count employed.
The coming session is likely to witness a resistance at the 5575 levels on advances. Support is likely at the 5450 below which the 5420 levels maybe seen. The bullish pivot for the session is likely at the 5525 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5475 levels below which fresh falls may occur. Traders must watch these levels for signs of trend determination in the coming session.
The daily candle chart of the Nifty shows a bullish candle with an upper wick , indicating mild profit sales on advances. As advocated by us yesterday, the multiple "koma" patterns are indicating a struggle by the bulls to create a base floor support for the Nifty near the 5400 levels. Follow up buying on declines near the 5400 levels will be a key aspect of any recovery. Should the bulls manage to keep the Nifty above the bullish pivot at 5525 consistently on Thursday, the outlook will be positive. On the flip side, sustaining below the 5475 levels may trigger declines. News flow will still determine immediate trends as Middle East and Japan will dominate trader mind sets.
The market internals indicate a lower turnover due to the lack of whole hearted buying support on advances. The number of trades were lower and the average ticket size per trade was lower, indicating poor retail participation in the markets. The capitalisation of the market was higher in line with a bullish session. The put call ratios indicate the bears ramping up their shorts on advances.
The outlook for the markets today is that of cautious optimism as the bulls will have to keep the Nifty above the 5525 levels sustainably, which may prove to be a mild challenge. Keep an eye on the volumes and open interest in conjunction with the prices.
The analyst is a Mumbai based author of India's first commodity trading guide book - "A Traders Guide to Indian Commodity Markets" and invites feedback at vijay@BSPLindia.com. Disclosure: The analyst has no exposure to the scrips recommended above.