Selling pressure stays

If the markets follow the Friday’s cues from the US market, the BSE Sensex and the S&P CNX Nifty are likely to consolidate or may see a relief rally, unless the Asian markets provide some negative cues on Monday. At a higher level, selling pressure will come and markets may see a downside.

The US stocks recovered from a global sell-off, erasing most of the Dow Jones’s 213-point drop, closing 31 points down on Friday as the US Fed and central banks of Europe, Japan, Australia and Canada pumped huge amount of money in their banking systems to avert a credit crunch.

The outlook appears to be guarded as the markets are trading below their support level at 4,500, and a possibility of 4,200-4,220 levels loom if persistent selling occurs. The Nifty near-month futures traded at Rs 34.15 discount to cash market compared with Rs 35.20 in the previous weekend. The basis is pointing towards a lower risk appetite as the markets move downwards. The downward bias continues.

Marketwide open interests have gone up slightly to Rs 84,000 crore. The Nifty will find resistance at 4450 and a short term support exist around 4200-4220. Put-call ratio (PCR) is 0.31:1. The total PCR has remained below the equilibrium point of 0.50 : 1.

This scenario indicates that market will remain bearish as short positions exist.