Nifty likely to witness range of 5100-4950: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened on an optimistic note and ended the session with losses as the bulls failed to keep the Nifty above the 5145 bullish pivot throughout the session. The benchmark indices ended with approx 0.65 % losses at close. The traded volumes were lower than the previous session which is a routine indicator for a bearish session. The market breadth was negative as the BSE & NSE combined advance decline ratio was 1176 : 3127. The capitalisation of the breadth was negative as the commensurate figures were Rs 2880 Crs : Rs 8809 Crs. The NSE shed Rs 59137 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 5165 / 5000 held as the Nifty kept within these levels, thereby validating our intraday levels.

The coming session is likely to witness resistance at the 5100 levels on advances. Support is likely at the 4950 levels. The bullish pivot for the session is likely at the 5095 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5060 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. The poor volumes are a tiny ray of hope but cannot be banked upon as a conclusive signal as markets are known to drift on poor volumes for extended periods of time. For the bulls to overcome the weakness, it is important that the Nifty stays above the 5090 levels intraday with higher volumes and open interest expansion. The Nifty sustaining below the 5060 levels may trigger a fresh bout of declines.

The market internals indicate a lower turnover due to the lack of buying conviction. The number of trades were lower and the average ticket size per trade was lower, which indicates poor retail buying. The capitalisation of the market was lower in line with a bearish session. The put call ratios indicate the bears holding their shorts on declines.

The outlook for the markets on Wednesday is that of cautious optimism as the bulls will have to keep the Nifty above the 5090 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.