Volatile market texture

Mumbai: On Wednesday, the benchmark indices continued profit booking as BSE Sensex was down by 536 points. Among sectors, despite weak momentum Reality and PSU Banks outperformed, both indices rallied over one per cent. Whereas IT index was the top looser, shed over two per cent. Technically, post-muted opening the Sensex breached the important support level of 71,500 and post breakdown it intensified selling pressure.

On daily charts, the index has formed bearish candle and on intraday charts, it is still holding lower top formation, which is largely negative. “We are of the view that, as long as the index is trading below 71,500 the weak sentiment is likely to continue,” says Shrikant Chouhan, head (equity research), Kotak Securities. “Below the same, market could slip till 71,000-70,900. On the flip side, technical bounce back possible only after dismissal of 71,500. Above 71,500 the market could move up till 71,750-71,950.”

For traders, the current market texture is volatile hence; level-based trading would be the ideal strategy for the day traders. Prashanth Tapse, senior V-P (research), Mehta Equities says: “Profit taking continued for a second straight session due to weak global cues as investors pared their holdings in IT and metal stocks.” The rally was sharp and swift over the past few weeks. Hence, expensive valuations provided investors an opportunity to trim their equity exposure. Also, with the Union Budget round the corner markets may see bouts of volatility with a slightly negative bias in the near to medium term.