Nifty likely to witness range of 4900-4775: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened on an mildly optimistic note and ended the session with continued losses as the bulls failed to keep the Nifty above the 4935 bullish pivot during the session. The benchmark indices ended with approx 0.8 % losses at close. The traded volumes were higher than the previous session which is a negative indicator for a bearish session. The market breadth was negative as the BSE & NSE combined advance decline ratio was 1630 : 2600. The capitalisation of the breadth was negative as the commensurate figures were Rs 4195 Crs : Rs 11617 Crs. The NSE shed Rs 45873 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 4950 / 4825 has held as the Nifty bounced exactly from 4825 levels, thereby validating our intraday counts.
The coming session is likely to witness resistance at the 4900 levels on advances. Support is likely at the 4775 levels below which the 4700 maybe tested. The bullish pivot for the session is likely at the 4885 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 larger bodied bearish candle after an inside day, indicating that the market forces found equilibrium on the downside. Being a weekend session loaded with a major news trigger (Fed announcement), the market players are unlikely to make very large bullish bets. Staying above the 4885 level with higher volumes and open interest will see the bulls getting a chance to come back. The Nifty sustaining below the 4850 levels may trigger a fresh bout of declines.
The market internals indicate a higher turnover due to the selling bias. The number of trades were higher and the average ticket size per trade was higher, which indicates selling. The capitalisation of the market was lower in line with a bearish session. The put call ratios indicate the bears retaining shorts on expiry.
The outlook for the markets on Friday is that of caution as the bulls will have to keep the Nifty above the 4885 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.