Nifty likely to witness range of 5175-5100: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened with a gap down and ended the session with losses as the bulls failed to keep the Nifty above the 5175 bullish pivot throughout the session. The benchmark indices ended with approx 0.4 % losses at close. The traded volumes were lower than the previous session which is a negative indicator for a pullback session. The market breadth was negative as the BSE & NSE combined advance decline ratio was 1981 : 2294. The capitalisation of the breadth was negative as the commensurate figures were Rs 3762 Crs : Rs 8838 Crs. The NSE shed Rs 22899 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 5200 / 5110 held as the Nifty kept within these levels, thereby validating our intraday levels.

The coming session is likely to witness resistance at the 5175 levels on advances above which the 5225 maybe tested. Support is likely at the 5100 levels below which the 5050 maybe tested. The bullish pivot for the session is likely at the 5165 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5140 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 gap down inverted hammer candle, which was filled intraday and the 5100 - 5110 area holding up for now. As long as the bulls keep the Nifty above the 5165 threshold with higher volumes and open interest expansion, the bears will be forced to cover shorts. The Nifty sustaining below the 5140 levels may trigger a fresh bout of declines. Being a long weekend, buying conviction is expected to taper off towards the end of the session.

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 participation at lower levels. The capitalisation of the market was lower in line with a bearish session. The put call ratios indicate the bears ramping up their shorts on upthrusts.

The outlook for the markets on Friday is that of mild optimism as the bulls will have to keep the Nifty above the 5165 levels sustain ably. In view of the positive overseas cues, there maybe a pullback rally, sustainability will remain a question mark.

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.