Nifty likely to witness range of 5450-5350: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened on a cautious note and ended the session with mild gains even as the bulls failed to hold the Nifty above the bullish pivot throughout the session. The pullback rally was in line with our expectations advocated in the weekly outlook as well as the pre market note. However, the buying remained feeble at best. The benchmark indices ended with minor changes at close. The traded volumes were lower compared to the previous session, which is a negative indicator for a bullish session. The market breadth was negative as the BSE & NSE combined advance decline ratio was 1612 : 2616. The capitalisation of the breadth was positive as the BSE & NSE combined figures were Rs 10669 Crs : Rs 2921 Crs. The NSE shed Rs 12815 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 5500 / 5280 held as the Nifty traded within these levels - thereby validating our intraday wave count employed.

The coming session is likely to witness a resistance at 5450 on advances. Support is likely at the 5350 levels. An extension of the Nifty spot beyond these thresholds will probably see a larger move unfolding. The bullish pivot for the session is likely at the 5420 levels and the bearish pivot at the 5400 levels. Traders must watch these levels for signs of trend determination in the coming session.

The daily candle chart of the Nifty shows a small bearish candle, within the previous day's range, making an inside pattern on the western Dow charts. The mild confidence we expressed yesterday that a pullback rally would ensue from lower levels was partially justified, though vigorous follow up buying was lacking. For the bulls to prevail over the bears, it is important that the Nifty remain above the 5420 levels consistently on Tuesday. The outlook today will be determined by how long the Nifty futures manage to stay above the bullish pivot level and declines below this threshold be on light volumes and be brief for an optimal scenario in which a recovery can occur.

The market internals indicate a lower turnover due to the lack of buying support on advances. The number of trades were lower and the average ticket size per trade was lower, indicating a cautious view in the day traders camp. The capitalisation of the market was lower in divergence with a bullish session. The put call ratios indicate the bears holding their shorts on rallies.

The outlook for the markets today is that of cautious optimism as the bulls must hold the Nifty above the 5420 levels sustain ably to manage an upmove in the coming session.

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.