Nifty likely to witness resistance at 5525: Bhambwani

By Vijay L Bhambwani, CEO of BSPLindia.com

The markets opened on a bearish note and ended the session with mild changes even as the bulls failed to test the Nifty 5500 bullish pivot throughout the session. The benchmark indices ended with approx 0.1% losses at close. The traded volumes were lower as compared to the previous session, which is a negative indicator for the first session of the week. The market breadth was negative as the BSE & NSE combined advance decline ratio was 2109 : 2123. The capitalisation of the breadth was negative as the commensurate figures were Rs 5132 crore : Rs 6024 crore. The NSE gained Rs 1811 crore in market capitalisation.

The indices have closed in the upper end of the intraday range as the bulls were able to offer support at lower levels. The intraday range specified for the Nifty between the 5525 / 5415 held as the Nifty trended within these levels, thereby validating our intraday levels. The coming session is likely to witness a resistance at the 5525 levels on advances. Support is likely at the 5440 levels below which the 5400 maybe tested. The bullish pivot for the session is likely at the 5475 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5455 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 bullish hammer with a long lower shadow, indicating a support on declines during the session. The downward sloping trendline remains the nemesis of the bulls and as long as rallies occur below this trendline, they are corrective pullbacks alone. The Nifty (spot) must stay above the 5475 levels sustainably with volumes and open interest expansion to rally intraday on Tuesday. On the flip side, sustaining below the 5455 levels may trigger a fresh bout of declines.

The market internals indicate a lower turnover due to the selling pressure. The number of trades were lower and the average ticket size per trade was lower, which indicates a selling bias. The capitalisation of the market was higher in divergence with a bearish session. The put call ratios indicate the bears ramping up their shorts on advances.

The outlook for the markets today is that of cautious optimism as the bulls will have to keep the Nifty above the 5475 levels sustain ably to trigger a fresh upmove.

Mandatory disclosure - the analyst has no exposure to the scrips recommended above.