Nifty likely to witness range of 5060-4950: 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 1.5 % 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 2918 : 1363. The capitalisation of the breadth was positive as the commensurate figures were Rs 8714 Crs : Rs 5573 Crs. The NSE gained Rs 78294 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 higher levels during the session. The intraday range specified for the Nifty between the 5000 / 4850 was marginally overcome on the upside as the Nifty tested the 5016 levels, thereby exceeding our intraday counts on the upside.

The coming session is likely to witness resistance at the 5060 levels on advances above which the secondary target would be 5125 levels (a low probability event). Support is likely at the 4950 levels below which the 4865 levels maybe tested. The bullish pivot for the session is likely at the 4985 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 4955 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 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, but the two day holiday window period and the weekend factor can curtail buying enthusiasm. Staying above the 4985 level with higher volumes and open interest will see the bulls getting a chance to markets higher intraday. The Nifty sustaining below the 4955 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 Friday is that of caution as the bulls will have to keep the Nifty above the 4985 levels sustain ably. In view of the weekend factor, maintaining the buying momentum throughout the session will be a challenge.

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.