Nifty likely to witness range of 5600-5470: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened on a firm note and ended the session with gains as the bulls managed to keep the Nifty above the 5475 bullish pivot levels. The benchmark indices ended with approx 1.5 % 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 2314 : 1961. The capitalisation of the breadth was positive as the BSE & NSE combined figures were Rs 7891 Crs : Rs 4705 Crs. The NSE gained Rs 70744 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 firmly at lower levels. The intraday range advocated for the Nifty between the 5550 / 5375 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 5600 levels on advances. Support is likely at the 5470 below which the 5385 levels maybe seen. The bullish pivot for the session is likely at the 5500 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5470 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 "daki" candle, after a "koma" pattern on Friday, indicating support build up on declines. Volumes remain a weak link in the chain as conviction based buying is lacking - making the recovery somewhat tricky. Should the bulls manage to keep the Nifty above the bullish pivot at 5500 consistently on Tuesday, the upmove may extend higher. 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 absence of buying conviction. The number of trades were lower and the average ticket size per trade was higher, indicating possible shifting of gears 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 5500 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.