Nifty likely to witness range of 5865-5660: Bhambwani
The coming session is likely to witness a range of 5865 on advances. Support is likely at the 5660. The wide range is due to the unusually high base effect of Monday's range.
January 11, 2011 / 08:25 IST
Technical Analyst, Vijay Bhambwani:
The markets opened on an bearish note and ended the day with deep losses as the bulls failed to keep the Nifty above the 5990 bullish pivot throughout the session as we had suggested it would be a tall order to achieve. The benchmark indices ended with approx 2.5 % 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 821 : 3506. The capitalisation of the breadth was negative as the BSE & NSE combined figures were Rs 2841 Crs : Rs 14216 Crs. The NSE shed Rs 159979 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 6010 / 5800 was violated as the Nifty tested the 5741 levels - thereby exceeding our intraday wave count employed on the downside. The coming session is likely to witness a range of 5865 on advances. Support is likely at the 5660. The wide range is due to the unusually high base effect of Monday's range. The bullish pivot for the session is likely at the 5850 levels and the bearish pivot at the 5800 levels. Traders must watch these levels for signs of trend determination in the coming session.The daily candle chart of the Nifty shows a big bearish candle with a lower wick, indicating mild short covering support on dips during the day. The session marked the sixth consecutive day of red candles as bulls shied away from offering support (as per Dow charts, it was the 5th day of declies). Fibonacci traders may observe - 5 is a Fibonacci number and that leads us to the possibility of a mild bounce around the corner. For the bulls to prevail over the bears, it is important that the Nifty remain above the 5850 levels consistently on Tuesday - again a tall order. The net bias - cautious optimism on Tuesday as long as the Nifty spot trades above the 5850 bullish pivot.The market internals indicate a lower turnover due to the weakness. The number of trades were higher and the average ticket size per trade was lower, indicating a weak retail buying. The capitalisation of the market was lower in line with a downtick session. The put call ratios indicate the bears covering their positions.The outlook for the markets today is that of cautious optimism as the bulls must hold the Nifty above the 5850 levels sustain ably to manage an upmove in the coming session, which is likely to be a difficult task. However, a mild pullback maybe expected.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. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
