Nifty likely to witness range of 4900-4775: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened with a bearish gap and ended the session with sizable losses as the bulls failed to keep the Nifty above the 4995 bullish pivot throughout the session. The benchmark indices ended with approx 2 % losses at close. The traded volumes were higher than the previous session which is a negative indicator for a bearish weekend session. The market breadth was negative as the BSE & NSE combined advance decline ratio was 1126 : 3210. The capitalisation of the breadth was negative as the commensurate figures were Rs 3772 Crs : Rs 11622 Crs. The NSE shed Rs 83205 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 5000 / 4725 has held as the Nifty trended within these levels, thereby validating our intraday levels. '

The coming session is likely to witness resistance at the 4900 levels on advances above which the 5000 maybe seen if the bears get squeezed. Support is likely at the 4775 levels, below which the 4700 maybe seen. The bullish pivot for the session is likely at the 4860 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 4825 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 small bodied bearish spinning top candle which shows indecision between the bulls and bears at the open / close band. The evidence of a temporary bottom building was seen on Friday and since the markets are light on open interest, a slight nudge maybe all that causes a pullback. Sustainability of the upmove will be however questionable. For the bulls to overcome the weakness, it is important that the Nifty stays above the 4860 levels intraday with higher volumes and open interest expansion. The Nifty sustaining below the 4825 levels may trigger a fresh bout of declines.

The market internals indicate a higher turnover due to the selling momentum. The number of trades were higher and the average ticket size per trade was higher, which indicates retail selling. The capitalisation of the market was lower in line with a downtick session. The put call ratios indicate the bears squaring up shorts on declines.

The outlook for the markets on Monday is that of cautious optimism as the bulls will have to keep the Nifty above the 4860 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.