Nifty likely to witness range of 5025-4875: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened on an optimistic note and ended the session with continued gains as the bulls managed to keep the Nifty above the 4875 bullish pivot during the session. The benchmark indices ended with approx 1 % 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 2851 : 1400. The capitalisation of the breadth was positive as the commensurate figures were Rs 7969 Crs : Rs 4448 Crs. The NSE gained Rs 52053 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 lower levels during the session, aided by pre expiry short covering at lower levels. The intraday range specified for the Nifty between the 4965 / 4825 has held as the Nifty retraced exactly from 4965 levels, thereby validating our intraday counts.
The coming session is likely to witness resistance at the 5025 levels on advances above which the 5100 maybe seen (low probability event) if the bears cover aggressively, ahead of expiry. Support is likely at the 4875 levels. The bullish pivot for the session is likely at the 4935 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 4900 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 "hammer" candle after a bullish "daki" on Monday - implying the return of the bulls, for now. Staying above the 4935 level with higher volumes and open interest will see the bulls retain their initiative. The Nifty sustaining below the 4900 levels may trigger a fresh bout of declines.
The market internals indicate a higher turnover due to the buying enthusiasm. The number of trades were higher and the average ticket size per trade was lower, which indicates retail buying. The capitalisation of the market was higher in line with a bullish session. The put call ratios indicate the bears ramping up shorts on advances.
The outlook for the markets on Wednesday is that of continued optimism as the bulls will have to keep the Nifty above the 4935 levels sustain ably. The global cues are supportive of an upthrust.
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