Support for Nifty at 5260: Vijay Bhambwani

Technical Analyst, Vijay Bhambwani:

The markets opened on an optimistic note and ended the session with continued losses as the bulls failed to keep the Nifty above the 5410 bullish pivot throughout the session. The benchmark indices ended with approx 1.5 % losses at close. The traded volumes were higher than the previous session which is a negative indicator for a bearish session. The market breadth was negative as the BSE & NSE combined advance decline ratio was 1605 : 2684. The capitalisation of the breadth was negative as the commensurate figures were Rs 3952 Crs : Rs 10206 Crs. The NSE shed Rs 58644 Crs in market capitalisation.
The indices have closed in the lower end of the intraday range as the bulls were unable to offer follow up support at higher levels during the session. The intraday range specified for the Nifty between the 5435 / 5340 held as the Nifty trended largely within these levels, thereby validating our intraday levels.
The coming session is likely to witness resistance at the 5375 levels on advances. Support is likely at the 5260 levels below which the 5210 maybe seen. The bullish pivot for the session is likely at the 5400 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5360 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 bearish engulfing "daki" candle, which indicates the return of the bears after a brief intraday abortive upthrust. The anticipated upmove did occur but the slide below the 5390 bearish pivot of the day set the tone unmistakably downwards. The downward sloping trendline is now an unimpeachable resistance for the bulls to overcome.  The Nifty (spot) must stay above the 5400 levels sustainably with volumes and open interest expansion to rally intraday on Friday. On the flip side, sustaining below the 5360 levels may trigger a fresh bout of declines. Being a weekend session, the buying conviction will be wanting.
The market internals indicate a higher turnover due to the selling. The number of trades were higher and the average ticket size per trade was lower, which indicates retail selling pressure. The capitalisation of the market was lower in line with a bearish session. The put call ratios indicate the bears squaring up their shorts on declines.
The outlook for the markets today is that of caution as the bulls will have to keep the Nifty above the 5400 levels sustain ably. Being a weekend session that seems like a tall order.
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.