Nifty likely to witness range of 5200-5000: Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened with a gap down yet again and ended the session with mild losses as the bulls failed to keep the Nifty above the 5150 bullish pivot throughout the session. The benchmark indices ended with approx 0.8 % losses at close. The traded volumes were higher than the previous session which is a positive indicator for a bounce back session. The market breadth was negative as the BSE & NSE combined advance decline ratio was 1173 : 3170. The capitalisation of the breadth was negative as the commensurate figures were Rs 7959 Crs : Rs 11071 Crs. The NSE shed Rs 73577 Crs in market capitalisation.

The indices have closed in the upper end of the intraday range as the bulls were able to offer support at lower levels during the session. The intraday range specified for the Nifty between the 5175 / 4875 held as the Nifty kept within these levels, thereby validating our intraday levels.

The coming session is likely to witness resistance at the 5200 levels on advances. Support is likely at the 5000 levels. The wide range is due to the high base effect of Tuesdays range. The bullish pivot for the session is likely at the 5090 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5025 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 big gap down candle, which was filled intraday and the 5100 - 5110 area (the point of conflict between bulls and bears advocated yesterday) was breached briefly. As long as the bulls keep the Nifty above this threshold, the bears will be forced to cover shorts for now. The possibility of a pullback maybe fair, though sustainability beyond a brief period maybe suspect - for now. The downward sloping trendline remains an impregnable resistance for the bulls to overcome.  The Nifty sustaining below the 5025 levels may trigger a fresh bout of declines.

The market internals indicate a higher turnover due to the churn at lower levels. The number of trades were higher and the average ticket size per trade was higher, which indicates participation at lower levels. The capitalisation of the market was lower in line with a net bearish session. The put call ratios indicate the bears ramping up their shorts on upthrusts.

The outlook for the markets on Wednesday is that of some optimism as the bulls will have to keep the Nifty above the 5090 levels sustain ably. In view of extended declines in the recent past, a pullback maybe expected.

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.