Nifty likely to witness range of 5435-5375: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened with a bearish gap and ended the session with continued losses as the bulls failed to keep the Nifty above the 5475 bullish pivot throughout the session. The benchmark indices ended with approx 0.9 % losses at close. The traded volumes were higher than the previous session which is a negative indicator for a bearish session. The market breadth was negative as the BSE & NSE combined advance decline ratio was 1679 : 2639. The capitalisation of the breadth was negative as the commensurate figures were Rs 2284 Crs : Rs 10884 Crs. The NSE shed Rs 39986 Crs in market capitalisation.

The indices have closed in the upper end of the intraday range as the bulls were able to offer follow up support at lower levels during the session, aided by bear covering. The intraday range specified for the Nifty between the 5500 / 5360 held as the Nifty trended within these levels, thereby validating our intraday levels.

The coming session is likely to witness resistance at the 5435 levels on advances, above which the 5475 maybe tested. Support is likely at the 5375 levels below which the 5340 maybe seen. The bullish pivot for the session is likely at the 5410 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5390 levels below which declines may occur. Traders must watch these levels for signs of trend determination in the coming session.

The daily candle chart of the Nifty shows a "spinning top" candle (fourth incident in five sessions), which indicates the a lack of clear direction in the intraday range. Note - the closing is above the opening and spinning top itself could imply a near term / temporary exhaustion of the downward pressure. The possibility of a pullback or even sideways trading is fair. The downward sloping trendline  remains a formidable resistance for the bulls to overcome.  The Nifty (spot) must stay above the 5410 levels sustainably with volumes and open interest expansion to rally intraday on Thursday. On the flip side, sustaining below the 5390 levels may trigger a fresh bout of declines.

The market internals indicate a higher turnover due to the selling. The number of trades were higher and the average ticket size per trade was higher, which indicates selling pressure. The capitalisation of the market was lower in line with a bearish session. The put call ratios indicate the bears squaring up their shorts on declines.

The outlook for the markets on Thursday is that of guarded optimism as the bulls will have to keep the Nifty above the 5410 levels sustain ably. Expect a mild pullback / consolidation.

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.

Mandatory disclosure - the analyst has no exposure to the scrips recommended above.