Nifty likely to witness range of 4850-4675: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened on an cautious note and ended the session with continued losses as the bulls failed to keep the Nifty above the 4850 bullish pivot during the session. The benchmark indices ended with approx 2 % losses at close. The traded volumes were lower than the previous session which is a routine indicator for a bearish weekend session. The market breadth was negative as the BSE & NSE combined advance decline ratio was 850 : 3494. The capitalisation of the breadth was negative as the commensurate figures were Rs 2516 Crs : Rs 10120 Crs. The NSE shed Rs 126262 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 4900 / 4700 has held as the Nifty bounced from 4720 levels, thereby validating our intraday counts.

The coming session is likely to witness resistance at the 4850 levels on advances. Support is likely at the 4675 levels below which the 4650 maybe tested. The bullish pivot for the session is likely at the 4800 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 4775 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 market forces found equilibrium on the downside on Friday. Being a weekend session loaded with a major news trigger (Fed announcement), the market players were expected to avoid very large bullish bets. The indices have declined for 5 weeks consecutively (5 is a Fibonacci number), indicating a probable pullback this week. Staying above the 4800 level with higher volumes and open interest will see the bulls getting a chance to come back intraday. The Nifty sustaining below the 4775 levels may trigger a fresh bout of declines.

The market internals indicate a lower turnover due to the poor retail selling bias. The number of trades were lower and the average ticket size per trade was lower, which indicates lack of trader participation. The capitalisation of the market was lower in line with a bearish session. The put call ratios indicate the bears squaring shorts on dips.

The outlook for the markets today is that of guarded optimism as the bulls will have to keep the Nifty above the 4800 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.