Nifty likely to witness range of 5000-4850: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened with a bullish gap and ended the session with sizable gains as the bulls managed to keep the Nifty above the 4800 bullish pivot throughout the session. The benchmark indices ended with approx 3 % gains at close. The traded volumes were lower than the previous session which is a negative  indicator for a bullish session. The market breadth was positive as the BSE & NSE combined advance decline ratio was 3391 : 934. The capitalisation of the breadth was positive as the commensurate figures were Rs 7593 Crs : Rs 3666 Crs. The NSE gained Rs 166069 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 4850 / 4675 was overcome on the upside as the Nifty tested the 4934 levels, thereby exceeding our intraday counts on the upside.

The coming session is likely to witness resistance at the 5000 levels on advances above which the secondary target would be 5050 levels. Support is likely at the 4850 levels. The bullish pivot for the session is likely at the 4895 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 4850 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 large bodied bullish candle, indicating the 4720 being now made swing low below which longs cannot be held. The anticipated pullback rally did arrive as indicated yesterday, though the magnitude was above our expectations. The the rally was achieved on lower volumes (partly attributed to a gap up open) which must change if the upthrust is sustain. Staying above the 4895 level with higher volumes and open interest will see the bulls getting a chance to markets higher intraday. The Nifty sustaining below the 4850 levels may trigger a fresh bout of declines.

The market internals indicate a lower turnover due to the poor retail participation. The number of trades were lower and the average ticket size per trade was higher, which indicates 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 Tuesday is that of continued optimism even as the bulls will have to keep the Nifty above the 4895 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.