Nifty likely to witness range of 5525-5450: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened on a nervous note and ended the session with losses as the bulls failed to keep the Nifty above it's bullish pivot during the session. The benchmark indices ended with approx 0.75 % losses at close. The traded volumes were lower as compared to the previous session, which is a minor mercy for a bearish session. The market breadth was negative as the BSE & NSE combined advance decline ratio was 1839 : 2386. The capitalisation of the breadth was negative as the BSE & NSE combined figures were Rs 2867 Crs : Rs 9661 Crs. The NSE shed Rs 22831 Crs in market capitalisation.

The indices have closed in the upper end of the intraday range as the bulls were able to feebly support the markets at lower levels. The intraday range advocated for the Nifty between the 5575 / 5475 has held loosely as the Nifty kept within these levels - thereby validating our intraday wave count employed.

The coming session is likely to witness a resistance at the 5525 levels on advances above which the 5550 maybe tested. Support is likely at the 5450 below which the 5420 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 5480 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 bearish small bodied candle, with a large lower wick, indicating some support on declines. The volumes and transaction size per trade remains a weak link in the chain as of now. Buying support is not forthcoming and markets appear to be treading on thin ice. For a continuation of the strength the 5500 must be overcome convincingly and then defended on Friday on abundant volumes. Being a weekend session, bulls are likely to be cautious in enhancing exposure.

The market internals indicate a lower turnover due to the lack of buying conviction at lower levels. The number of trades were lower and the average ticket size per trade was lower, indicating trader withdrawal. The capitalisation of the market was lower in line with a bearish session. The put call ratios indicate the bears ramping up their Nifty & Stock shorts even on declines.

The outlook for the markets today is that of caution as the bulls will have to keep the Nifty above the 5520 levels sustainably. Weekend worries coupled with stress from Saudi Arabia, Libya and Bahrain will keep bulls under check.

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.