Nifty likely to witness range of 5520-5400: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened with a bearish gap and ended the session with losses as the bulls failed to keep the Nifty above it's bullish pivot during the session. The "Gyakushu Sen" formation played out along expected lines and it was the bears that led the morning attack formation. The benchmark indices ended with approx 1.5 % losses at close. The traded volumes were significantly lower as compared to the previous session, which is a minor mercy for a bearish session as markets can slide on poor volumes during stressful periods for prolonged periods. The market breadth was negative as the BSE & NSE combined advance decline ratio was 1230 : 3019. The capitalisation of the breadth was negative as the BSE & NSE combined figures were Rs 2665 Crs : Rs 9273 Crs. The NSE shed Rs 63825 Crs in market capitalisation.

The indices have closed in the upper end of the intraday range even as the bulls were able to support the markets at lower levels - aided by bear covering and political news flow. The intraday range advocated for the Nifty between the 5600 / 5465 was violated as the Nifty tested the 5408 levels - thereby exceeding our intraday wave count employed on the downside.

The coming session is likely to witness a resistance at the 5520 levels on advances. Support is likely at the 5400 below which the 5360 levels maybe seen. The bullish pivot for the session is likely at the 5465 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5435 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 doji candle, indicating some support on declines. Note the gap down opening which leaves an open "window" which may need closing in the coming few sessions. The "Gyakushu Sen" or bearish counter attack pattern played out with anticipated results. For a reversal of the weakness and fresh buying to emerge, the 5465 must be defended vigorously on Tuesday. Geo political cues will continue to command over the immediate sentiments in the near term.

The market internals indicate a lower turnover due to the lack of buying conviction at all levels. The number of trades were lower and the average ticket size per trade was lower, indicating poor retail participation. The capitalisation of the market was lower in line with a bearish session. The put call ratios indicate the bears squaring up some of their shorts on declines.

The outlook for the markets today is that of caution as the bulls will have to keep the Nifty above the 5465 levels sustainably.

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.