Nifty likely to witness range of 5200-5110: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened with a gap up and ended the session with gains as the bulls managed to keep the Nifty above the 5090 bullish pivot throughout the session. The benchmark indices ended with approx 1.5 % gains at close. The traded volumes were lower than the previous session which is a negative indicator for a bullish session. The market breadth was positive as the BSE & NSE combined advance decline ratio was 3443 : 944. The capitalisation of the breadth was positive as the commensurate figures were Rs 9237 Crs : Rs 5660 Crs. The NSE gained Rs 95930 Crs in market capitalisation.

The indices have closed at the median point of the intraday range as the bulls were able to offer support at lower levels during the session, aided by bear covering. The intraday range specified for the Nifty between the 5200 / 5000 held as the Nifty retraced from the 5198 levels, thereby validating our intraday levels.

The coming session is likely to witness resistance at the 5200 levels on advances above which the 5255 maybe tested. Support is likely at the 5110 levels below which the 5050 maybe tested. The bullish pivot for the session is likely at the 5175 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5150 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 up candle, which was filled intraday and the 5100 - 5110 area (the point of conflict between bulls and bears advocated recently) overcome for now. As long as the bulls keep the Nifty above the 5175 threshold, the bears will be forced to cover shorts. The anticipated pullback occurred, though the volumes were lower than optimal. That makes the sustainability of the upthrust suspect. The Nifty sustaining below the 5150 levels may trigger a fresh bout of declines.

The market internals indicate a lower turnover due to the lack of buying conviction at higher levels. 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 higher in line with a bullish session. The put call ratios indicate the bears ramping up their shorts on upthrusts.

The outlook for the markets on Thursday is that of abundant caution as the bulls will have to keep the Nifty above the 5175 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.