Tuesday, October 30, 2007

Watch out for follow-up buying on declines

The markets continued on their ascent inspite of the weekend factor and the beginning of new F&O series. The traded volumes were marginally lower on the NSE as the upthrust was met with scepticism from the retail camp.

The market breadth was positive as the combined exchanges advance decline ratio was 2510:1396. The capitalisation of breadth was also positive as the commensurate figures were Rs 24706 cr:Rs 4239 cr.

The F&O data for Thursday indicated a routine paring of exposure on expiry day amidst higher implied volatility.

The 5655 / 5480 range specified for Friday was overcome on the upside after the Nifty managed to stay above the 5555 threshold, advocated as a bullish pivot point for Friday.

The positive market breadth inspires confidence, though the lower traded volumes are a cause for some concern.

The Nifty spot attempted to test the previous high of 5737 and that confirms the “hound of baskerville” pattern advocated more than a week ago in this column. The gateway to the projected target of 6377 on the Nifty over the medium term, is now open.

The coming session must be monitored for signs of follow-up buying on declines, to enable the bulls to maintain their initiative.

The outlook for the markets on Monday is that of continued optimism. The Nifty spot is likely to see a support pivot at 5640. Avoid shorts as of now.

No comments: