Nifty likely to witness range of 5525-5375: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened with a lower gap and ended the session with losses as the news from Japan kept players on the edge. The benchmark indices ended with approx 1.5 % losses at close. The traded volumes were higher as compared to the previous session, which is negative indicator for a bearish session. The market breadth was negative as the BSE & NSE combined advance decline ratio was 1095 : 3175. The capitalisation of the breadth was negative as the BSE & NSE combined figures were Rs 4277 Crs : Rs 12304 Crs. The NSE shed Rs 92790 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 5600 / 5385 has held as the Nifty trended within levels - thereby validating our intraday wave count employed.
The coming session is likely to witness a resistance at the 5525 levels on advances. Support is likely at the 5375 below which the 5300 levels maybe seen. The wide range is due to the high base effect of Tuesdays intraday range. The bullish pivot for the session is likely at the 5450 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5420 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 "koma" candle, after a similar pattern on Friday, indicating support existing on declines. Traders must watch the 5360 level below which the Koma pattern based support may dissolve. As advocated by us yesterday, conviction based buying is lacking - making the recovery somewhat tricky. Should the bulls manage to keep the Nifty above the bullish pivot at 5450 consistently on Wednesday, the fall may be arrested for now. News flow will still determine immediate trends as Middle East and Japan will dominate trader mind sets.
The market internals indicate a higher turnover due to the selling bias. The number of trades were higher and the average ticket size per trade was higher, indicating unwinding in the markets. The capitalisation of the market was lower in line with a bearish session. The put call ratios indicate the bears squaring up their Nifty shorts on declines.
The outlook for the markets today is that of cautious optimism as the bulls will have to keep the Nifty above the 5450 levels sustainably. 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.