Nifty likely to witness range of 5000-4850: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened on a bearish note and ended the session with sizable losses as the bulls failed to keep the Nifty above the 5080 bullish pivot throughout the session. The benchmark indices ended with approx 2 % losses at close. The traded volumes were mildly 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 912 : 3418. The capitalisation of the breadth was negative as the commensurate figures were Rs 1681 Crs : Rs 11060 Crs. The NSE shed Rs 117313 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 5125 / 4960 was breached as the Nifty tested the 4932 levels, thereby exceeding our intraday levels on the downsides.
The coming session is likely to witness resistance at the 5000 levels on advances. Support is likely at the 4850 levels, below which the 4725 maybe seen. The wide range is due to the high base effect of Thursdays session. The bullish pivot for the session is likely at the 4995 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 4975 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 large bodied bearish "daki" candle which has bearish implications. The global heat is likely to negatively impact domestic sentiments, with the weekend factor adding grist to the already exacerbated situation. For the bulls to overcome the weakness, it is important that the Nifty stays above the 4995 levels intraday with higher volumes and open interest expansion. The Nifty sustaining below the 4975 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 some Nifty shorts on declines.
The outlook for the markets on Friday is that of caution as the bulls will have to keep the Nifty above the 4990 levels sustain ably - a tough challenge for a weekend session.
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.