Nifty likely to witness range of 5925-5850: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened on an optimistic note and ended the session with mild gains as the bulls managed to keep the the Nifty above the 5820 bullish pivot throughout the day. The benchmark indices ended with approx 0.65 % gains at close. The traded volumes were higher as compared to the previous session, which is positive indicator for an uptick session. The market breadth was negative as the BSE & NSE combined advance decline ratio was 2067 : 2282. The capitalisation of the breadth was negative as the commensurate figures were Rs 7270 Crs : Rs 9779 Crs. The NSE gained Rs 12009 Crs 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 advocated for the Nifty between the 5925 / 5780 has held as the Nifty tested the 5913 levels and retraced - thereby validating our intraday wave count employed.

The coming session is likely to witness a resistance at the 5925 levels on advances above which the 5945 maybe tested. Support is likely at the 5850 levels below which the 5825 maybe seen. The bullish pivot for the session is likely at the 5900 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5875 levels below which profit taking may set in. Traders must watch these levels for signs of trend determination in the coming session.

The daily candle chart of the Nifty shows a "Juji" doji (long legged doji) with a gap up which indicates the indecisive result of the tug of war between bulls and bears. The downward sloping trendline remains in place and remains an impediment towards a complete trend reversal / breakout and a "Juji" doji occuring near this threshold warns of caution. The Nifty (spot) must stay above the 5900 levels sustainably with volumes and open interest expansion to retain it's upward momentum. On the flip side, sustaining below the 5875 levels may trigger profit sales after a gap up doji session.

The market internals indicate a higher turnover due to the buying on price declines. The number of trades were lower and the average ticket size per trade was higher, signaling smart money presence. The capitalisation of the market was higher in line with a bullish session. The put call ratios indicate the bears ramping up 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 5900 levels sustain ably to extend the upmove.

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.

Disclosure: The analyst has no exposure to the scrips recommended above.