Dice loaded in favour of the bulls

The markets opened with a bang and closed the session with somewhat of a whimper as profit taking at higher levels eroded early gains. As I have been advocating, a clear and convincing close above the 4300 level on the Nifty spot is likely to be a definite trigger for the bulls to hitch their wagons to the market upmove. Till that happens, upsides are likely to be sporadic and weak.

The market breadth was positive as the BSE & NSE combined advance decline ratio on a BSE & NSE combined basis stood at 1982 : 1639 and the capitalisation of the breadth was also positive as the BSE & NSE combined figures were Rs 9317 cr : Rs 5064 cr.

The indices have closed above the previous day’s close and significantly lower than the intraday perches. My investors will recall my hypothesis of a few days ago advocating bullishness in the markets based on the ratio of the average traded price vis-a-vis the last traded price of the Nifty near month futures.

The same pattern has occurred on the 60 minute charts and I feel the coming session should be a positive one - barring unforeseen circumstances.

The coming session will witness an intraday range of 4320 on advances 4274 on declines. A breakout in either direction will determine the absolute short term direction. Keltner studies point towards the dice of possibility loaded in favour of the bulls.

The coming session should witness a positive bias as long as the overseas market remains firm and the long positions initiated via the bull call spread are in the money and may be held for now. Contrarian players should curb the urge to go short for now.

Vijay Bhambwani