Nifty likely to witness range of 5120-4960: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened with a bullish gap and ended the session with gains as the bulls managed to keep the Nifty above the 4895 bullish pivot throughout the session. The benchmark indices ended with approx 0.75 % gains at close. The traded volumes were higher than the previous session which is a positive  indicator for a bullish session. The market breadth was positive as the BSE & NSE combined advance decline ratio was 2554 : 1727. The capitalisation of the breadth was positive as the commensurate figures were Rs 9426 Crs : Rs 5663 Crs. The NSE gained Rs 49303 Crs in market capitalisation.

The indices have closed at the lower end of the intraday range as the bulls were unable to offer support at higher levels during the session. The intraday range specified for the Nifty between the 5125 / 4950 held as the Nifty kept within these levels, thereby validating our intraday counts.

The coming session is likely to witness resistance at the 5120 levels on advances. Support is likely at the 4960 levels below which the 4925 levels maybe tested. The bullish pivot for the session is likely at the 5075 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5040 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 larger bodied bearish candle, indicating the bulls encountering overhead supply in case of upthrusts. That the rally was achieved on higher volumes is a sign of mild optimism which will need active follow up buying in the coming week if the bulls are to retain their initiative. Staying above the 5075 level with higher volumes and open interest will see the bulls getting a chance to markets higher intraday. The Nifty sustaining below the 5040 levels may trigger a fresh bout of declines.

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

The outlook for the markets on Monday is that of caution as the bulls will have to keep the Nifty above the 5075 levels sustain ably - a challenging task in view of the overseas weakness.

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.