Nifty likely to witness range of 5775-5535: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened on a cautious note and ended the day with widespread losses after a highly volatile session even as the bulls failed to keep the Nifty above the 5815 bullish pivot throughout the session. The benchmark indices ended with approx 1.75 % losses at close. The traded volumes were lower compared to the previous session, which is a routine indicator for a bearish weekend session. The market breadth was negative as the BSE & NSE combined advance decline ratio was 1193 : 3077. The capitalisation of the breadth was negative as the BSE & NSE combined figures were Rs 4284 Crs : Rs 11592 Crs. The NSE shed Rs 96471 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 5830 / 5675 was violated as the Nifty tested the 5640 levels intraday - thereby exceeding our intraday wave count employed on the downside.

The coming session is likely to witness a range of 5775 on advances. Support is likely at the 5535. The wide range is due to the high base effect of Fridays intraday range. The bullish pivot for the session is likely at the 5750 levels and the bearish pivot at the 5700 levels. Traders must watch these levels for signs of trend determination in the coming session.

The daily candle chart of the Nifty shows a bearish candle with a big body and a large upper wick, indicating resistance on advances during the day. The critically needed follow up buying support failed to materialise yet again. The Nifty support at 5690 levels from where a pullback was seen in the past was ultimately violated and the markets may seek lower levels. For the bulls to prevail over the bears, it is important that the Nifty remain above the 5750 levels consistently on Monday - a tall order. The net bias - caution on Monday as long as the Nifty spot trades below the 5700 bearish pivot.

The market internals indicate a lower turnover due to the week end factor. The number of trades were higher 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 downtick session. The put call ratios indicate the bears squaring up their positions on declines.

The outlook for the markets today is that of caution as the bulls must hold the Nifty above the 5750 levels sustain ably to manage an upmove in the coming session - difficult in view of the overhead supply.

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.