There was no steam at all for Nifty to get closer to strong resistance at 5,680 as it reversed from 5,645 to trigger a false break below strong support at 5,560 (low of 5,555) before close at 5,567. While the close above 5,560 is somewhat positive; the lack of momentum despite solid support from FIIs is a big concern for the bulls. Given the depressed domestic cues, it is just matter of time before we see a quick run up to 5,200-5,170 where some genuine buying from strategic investors should come in. Let us handle that when we reach there.Till then, let us watch gains to be limited at 5,650-5,680 for test/break of 5,560 for 5,500 ahead of 5,430. The next objectives are 5,340/5,250/5,190 which we will keep at the back of the mind
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 session. The intraday range specified for the Nifty between the 5665 / 5525 held as the Nifty trended within these levels, thereby validating our intraday levels. The coming session is likely to witness resistance at the 5625 levels on advances. Support is likely at the 5500 levels below which the 5470 maybe tested. The bullish pivot for the session is likely at the 5615 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5590 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 large bodied bearish engulfing candle "daki" which indicates the bears prevailing over the bulls. That the volumes rose on this decline is a sign of nervousness. The downward sloping trendline needs watching as a resistance for the bulls in the coming days. The Nifty (spot) must stay above the 5615 levels sustainably with volumes and open interest expansion to rally intraday on Thursday. On the flip side, sustaining below the 5590 levels may trigger a fresh bout of declines.
The market internals indicate a higher turnover due to the bearishness. The number of trades were higher and the average ticket size per trade was lower, which indicates retail selling. 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.
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