The markets flattered to deceive the bulls as the indices bucked the bullish overseas cues right from the word go. The initial part of the session itself gave indications of the impeding fall as the selling contagion spread fairly rapidly. That the volumes rose on this downtick session was a further confirmation of the weakness in the undertone.

The BSE & NSE combined market breadth was negative as the numbers were 582 : 3286. The capitalisation of the breadth was also bearish as the combined exchange figures were Rs 1009 crs : Rs 13318 crs.

The F&O data for the previous session were lower by 1.67 per cent, signs of unwinding on Monday itself.

The indices have closed at the lower end of the intraday range and that too on higher volumes. The daily chart of the Nifty spot shows the index closing near its 200-day SMA, which is a critical juncture for technicians.

After the support anticipated at the 4115 was violated, the fall was rapid and underscored the urgency in sales in the markets. The session can be qualified as a smash day pattern as per William’s studies for day traders.

The coming session will witness an intraday range of 3965 on declines and 4185 on advances. Watch the market internals keenly in the coming days.

The outlook for Wednesday is that of continued caution. My view remains constant for almost a month that traders need to avoid big ticket trades and exercise caution. Victory in current markets includes capital preservation which is your freedom to trade on another day.