Nifty likely to witness range of 5500-5375: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened on a steady note and ended the session with losses as the bulls retreated after the catastrophic chain of events in Japan. The benchmark indices ended with approx 0.8 % losses at close. The traded volumes were higher as compared to the previous session, which is negative for a bearish weekend session. The market breadth was negative as the BSE & NSE combined advance decline ratio was 1287 : 3001. The capitalisation of the breadth was negative as the BSE & NSE combined figures were Rs 3237 Crs : Rs 11916 Crs. The NSE shed Rs 56667 Crs in market capitalisation.

The indices have closed in the lower end of the intraday range as the bulls were unable to support the markets firmly at lower levels. The intraday range advocated for the Nifty between the 5525 / 5420 was breached mildly as the Nifty tested the 5411 levels - thereby exceeding our intraday wave count employed marginally on the downside.

The coming session is likely to witness a resistance at the 5500 levels on advances above which the 5550 maybe tested. Support is likely at the 5375 below which the 5350 levels maybe seen. The bullish pivot for the session is likely at the 5475 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5440 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 2 declining days, indicating some support on declines. These candles indicate a sense of neutrality or equilibrium between the bulls and bears and suggest that there is resistance towards the ongoing trend (currently downwards). Traders may note that the intraday lows of Monday (Mar 07 2011) have held as a support, which was a gap down "doji". Should the bulls manage to keep the Nifty above the bullish pivot 5475 consistently on Monday, the bullish confirmation would be received on both western bar charts and the "koma" and markets may rally higher. News flow will still determine immediate trends as traders re-align positions, so keep exposure levels curtailed.

The market internals indicate a higher turnover due to the bull / bear tug-of-war on declines. The number of trades were higher and the average ticket size per trade was higher, indicating possible shifting of gears 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 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 5475 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.