Nifty likely to take support at 4975: Vijay Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened with a bearish gap and ended the session with losses as the bulls failed to keep the Nifty above the 5075 bullish pivot throughout the session. The benchmark indices ended with approx 0.5 % losses at close. The traded volumes were lower than the previous session which is a routine  indicator for a bearish session. The market breadth was positive as the BSE & NSE combined advance decline ratio was 2232 : 2041. The capitalisation of the breadth was positive as the commensurate figures were Rs 9263 Crs : Rs 6613 Crs. The NSE shed Rs 15419 Crs in market capitalisation.

The indices have closed at the upper end of the intraday range as the bulls were able to offer support at lower levels during the session. The intraday range specified for the Nifty between the 5120 / 4960 held as the Nifty bounced from the 4964 levels, thereby validating our intraday counts.

The coming session is likely to witness resistance at the 5060 levels on advances above which the 5120 levels maybe tested (a low probability event as of now). Support is likely at the 4975 levels below which the 4915 levels maybe tested. The bullish pivot for the session is likely at the 5010 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 4985 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 smaller bodied bullish hammer, indicating the bulls cushioning the falls to a degree. Staying above the 5010 level with higher volumes and open interest will see the bulls getting a chance to markets higher intraday. The Nifty sustaining below the 4985 levels may trigger a fresh bout of declines.

The market internals indicate a lower turnover due to the weakness. The number of trades were lower and the average ticket size per trade was lower, which indicates poor retail buying. The capitalisation of the market was lower in line with a bearish session. The put call ratios indicate the bears stepping up their shorts on advances.

The outlook for the markets on Tuesday is that of guarded optimism as the bulls will have to keep the Nifty above the 5010 levels sustain ably.

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.