Support likely at 5450 on Nifty: Bhambwani

By Vijay L Bhambwani, CEO of BSPLindia.com

The markets opened on an optimistic note and ended the session with losses as the bulls failed to keep the the Nifty above the 5550 bullish pivot through out the session. Our view of a selloff in the latter half of the session played out along expected lines. The benchmark indices ended with approx 0.8% losses at close. The traded volumes were marginally lower as compared to the previous session, which is a routine indicator for a weekend downtick session. The market breadth was negative as the BSE & NSE combined advance decline ratio was 1901 : 2324. The capitalisation of the breadth was negative as the commensurate figures were Rs 3662 crore : Rs 8719 crore. The NSE shed Rs 40702 crore in market capitalisation.

The indices have closed in the lower end of the intraday range as the bulls were unable to support the markets at higher levels. The intraday range specified for the Nifty between the 5600 / 5490 held as the Nifty trended within these levels, thereby validating our intraday levels. The coming session is likely to witness a resistance at the 5575 levels on advances. Support is likely at the 5450 levels below which the 5420 maybe tested. The bullish pivot for the session is likely at the 5570 levels above which the Nifty must stay throughout the session. Note how the bullish pivot and resistance are converging as the markets closed at the lower end of Fridays range. The bearish pivot is at the 5540 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" pattern, which indicates a resistance on the upsides. The bears over whelmed the bulls as was advocated for the latter half of Fridays session. The downward sloping trendline still remains a maginot line for the bulls to overcome - failing which any upthrust remains a relief rally. The Nifty (spot) must stay above the 5570 levels sustainably with volumes and open interest expansion to rally intraday. On the flip side, sustaining below the 5540 levels may trigger a fresh bout of declines.

The market internals indicate a mildly lower turnover due to the weekend factor. The number of trades was lower and the average ticket size per trade was higher, which indicates a poor buying bias. The capitalisation of the market was lower in line with a bearish session. The put call ratios indicate the bears squaring up their Nifty shorts on declines.

The outlook for the markets today is that of guarded optimism as the bulls will have to keep the Nifty above the 5570 levels sustain ably to trigger a fresh upmove. Upsides are likely to be calibrated by overhead supply pressures.

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