Avoid big ticket longs as of now

Technical Analyst, Vijay Bhambwani:

The markets opened with a gap up along expected lines and ended with almost 6 % gains as the players celebrated the UPA govt winning the trust vote. The traded volumes were sharply higher and that is a sign of optimism on an uptick session. The market breadth was positive as the BSE & NSE combined advance decline ratio stood at 3414 : 541. The capitalisation of the breadth was also positive as the commensurate figures were Rs 26014 Crs : Rs 779 Crs. The f&o data indicated a higher turnover and a rally in the PCR as the bears pressed fresh shorts.

The indices have closed at the upper end of the intraday band as the bulls prevailed over the bears that too convincingly. The market internals being positive on an uptick session and a sharp spike in volumes makes the upmove a stronger one as compared to the previous session. The intraday range for Wednesday advocated at the 4340 / 4170 was overcome as the Nifty surpassed the upper threshold even on a closing basis. The Nifty is now poised at the upper end of a downward sloping channel - always a tricky area for short term traders.

The coming session is likely to witness a range of 4570 on advances and 4325 on declines. The wide range is due to the higher base effect of Wednesday's session. The bullish pivot for the session will be the 4400 above which the spot Nifty must remain to be firm. On the flip side, the bearish pivot will be the 4340 level below which the bears will prevail over the bulls.

The market internals indicate a higher turnover as the participation levels rose due to the underlying strength. The number of trades increased and the average ticket size was higher, indicating a strong buying bias. The capitalisation of the market was higher in line with an uptick session.

The outlook for the markets today is that of guarded optimism as the markets may choose to consolidate after a big upthrust. Ignore big ticket longs as of now.

Disclosure: The analyst has no exposure to any scrip/s recommended above.