Nifty likely to witness range of 5575-5475: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened on a bullish note and ended the session with mild gains even as the bulls struggled to keep the Nifty above it's bullish pivot during the session. The benchmark indices ended with approx 0.2 % gains at close. The traded volumes were marginally higher as compared to the previous session, but significantly lower than the average volumes, which is a negative sign for a bullish session it indicates a lack of buying conviction. The market breadth was positive as the BSE & NSE combined advance decline ratio was 2507 : 1768. The capitalisation of the breadth was negative as the BSE & NSE combined figures were Rs 4165 Crs : Rs 10773 Crs. The NSE gained Rs 21016 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 - aided by news flow on fuel price control / decontrol. The intraday range advocated for the Nifty between the 5560 / 5475 has held accurately 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 5575 levels on advances above which the 5625 maybe tested. Support is likely at the 5475 below which the 5435 levels maybe seen. The bullish pivot for the session is likely at the 5535 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5505 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 support on declines. The volumes and transaction size per trade remains a weak link in the chain as of now. For a continuation of the strength the 5535 must be overcome convincingly and then defended on Thursday on abundant volumes.

The market internals indicate a higher turnover due to the selling conviction at higher levels. The number of trades were higher and the average ticket size per trade was higher, indicating selling pressure. The capitalisation of the market was higher in line with a bullish session. The put call ratios indicate the bears squaring up their index 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 5535 levels sustainably. Volumes must keep pace with rising 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.