Nifty likely to witness range of 5500-5330: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened on a subdued but optimistic note and ended the day with losses 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 1.5 % losses at close. The traded volumes were lower compared to the previous session, which is a routine indicator for a bearish session. The market breadth was negative as the BSE & NSE combined advance decline ratio was 1298 : 2966. The capitalisation of the breadth was negative as the BSE & NSE combined figures were Rs 6665 Crs : Rs 10472 Crs. The NSE shed Rs 90622 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 5585 / 5450 was violated as the Nifty fell below the support levels - thereby exceeding our intraday wave count employed on the downside.

The coming session is likely to witness a resistance at 5500 on advances above which the 5525 maybe seen. Support is likely at the 5330. The bullish pivot for the session is likely at the 5490 levels and the bearish pivot at the 5450 levels. Traders must watch these levels for signs of trend determination in the coming session.

The daily candle chart of the Nifty shows a large bearish "daki" candle after a bullish one, indicating a selling bias in the absolute near term. Whether this selling bias will create a sell climax and therefore a short term base or lead to lower levels will be determined by follow up buying, which remains a critical aspect for now. For the bulls to prevail over the bears, it is important that the Nifty remain above the 5490 levels consistently on Wednesday - a tall order for now.

The market internals indicate a lower turnover due to the absence of buying support on declines. The number of trades were lower and the average ticket size per trade was lower, indicating a poor buying bias. The capitalisation of the market was lower in line with a bearish session. The put call ratios indicate the bears squaring their shorts for now.

The outlook for the markets today is that of caution as the bulls must hold the Nifty above the 5490 levels sustain ably to manage an upmove in the coming session. A short covering based pullback cannot be ruled out.

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.