Nifty likely to witness range of 5425-5225: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened on an optimistic note and ended the session with gains after a see-saw budget session even as the bulls managed to defend the Nifty bullish pivot. The benchmark indices ended with approx 0.6 % gains at close. The traded volumes were higher as compared to the previous session, which is a positive indicator for a bullish session. The market breadth was positive as the BSE & NSE combined advance decline ratio was 2402 : 1811. The capitalisation of the breadth was negative as the BSE & NSE combined figures were Rs 9061 Crs : Rs 11531 Crs. The NSE gained Rs 51587 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 at higher levels. The intraday range advocated for the Nifty between the 5425 / 5200 was overcome as the Nifty tested the 5477 levels - thereby exceeding our intraday wave count employed on the upside.

The coming session is likely to witness a resistance at 5425 on advances. Support is likely at the 5225. The bullish pivot for the session is likely at the 5390 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5370 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 gravestone or "tohba" doji, with a large upper wick indicating resistance on advances. This has bearish implications in the absolute near term as upsides will meet overhead supply from unwinding. The bulls must keep the index above the bullish pivot of 5390 consistently on Tuesday to extend the upmove sustainably over the near term.

The market internals indicate a higher turnover due to the selling pressure at higher levels. The number of trades were higher and the average ticket size per trade was higher, indicating a selling pressure. The capitalisation of the market was higher in line with a bullish session. The put call ratios indicate the bears covering 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 5390 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.