Nifty likely to witness range of 5500-5410: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened on a bearish note and ended the session with losses as the bulls failed to keep the Nifty above the 5530 bullish pivot throughout the session. The benchmark indices ended with approx 1.2 % 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 negative as the BSE & NSE combined advance decline ratio was 1179 : 3152. The capitalisation of the breadth was negative as the commensurate figures were Rs 3985 Crs : Rs 8112 Crs. The NSE shed Rs 52135 Crs in market capitalisation.

The indices have closed in the lower end of the intraday range as the bulls were unable to offer follow up support at higher levels during the session. The intraday range specified for the Nifty between the 5550 / 5400 held as the Nifty trended within these levels, thereby validating our intraday levels.

The coming session is likely to witness resistance at the 5500 levels on advances. Support is likely at the 5410 levels below which the 5360 maybe seen. The bullish pivot for the session is likely at the 5475 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5450 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 after three consecutive spinning tops, which indicates the domination of the bears in the market place. The downward sloping trendline  remains a formidable resistance for the bulls to overcome.  The Nifty (spot) must stay above the 5475 levels sustainably with volumes and open interest expansion to rally intraday on Wednesday. On the flip side, sustaining below the 5450 levels may trigger a fresh bout of declines.

The market internals indicate a lower turnover due to the lack of buying conviction. The number of trades were lower and the average ticket size per trade was mildly higher, which indicates poor trader participation. 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 Wednesday is that of caution as the bulls will have to keep the Nifty above the 5475 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.