Nifty likely to witness range of 5495-5380: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened on a bullish note and drifted lower in the latter half of the day as the bulls failed to support the Nifty on declines and hold the index above the bullish pivot throughout the session. The benchmark indices ended with approx 0.20 % gains at close. The traded volumes were steady compared to the previous session, which is a routine indicator for an insipid session. The market breadth was positive as the BSE & NSE combined advance decline ratio was 2151 : 2067. The capitalisation of the breadth was negative as the BSE & NSE combined figures were Rs 5220 Crs : Rs 11872 Crs. The NSE gained Rs 21107 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 / 5330 held as the Nifty remained within these levels - thereby validating our intraday wave count employed.

The coming session is likely to witness a resistance at 5495 on advances above which the 5535 maybe seen. Support is likely at the 5380 below which the 5360 maybe tested. The bullish pivot for the session is likely at the 5460 levels and the bearish pivot at the 5440 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 a larger bearish one, indicating an inside pattern as per western charts and a possible support near the intraday low of the larger bearish candle. As we advocated yesterday, the follow up buying remains a critical aspect for now. For the bulls to prevail over the bears, it is important that the Nifty remain above the 5460 levels consistently on Thursday.

The market internals indicate a steady turnover due to the absence of buying support on advances. The number of trades were lower and the average ticket size per trade was higher, indicating an improved buying bias. The capitalisation of the market was higher in line with a bullish session. The put call ratios indicate the bears ramping up their shorts.

The outlook for the markets today is that of cautious optimism as the bulls must hold the Nifty above the 5460 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.