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April 30, 2005

Markets sink below previous supports. Sensex sheds 192 points

Higher volumes, negative breadth as downtrend gains momentum

Weekly statistics

Indices	Open	High	Low	Close	Change
BSE - 30	6338	6391	6138	6154	192.13
BSE - 200	846	852	818	821	26.76
NSE - 50	1968	1974	1896	1902	64.85
Dow Jones	10193 34	Nasdaq	1922 11	FTSE	4802 48
Advances	6265	Declines	9421	Put / Call trades - 79889 : 124724
FII Investments	Rs  990 Crs April 1 - 28		Domestic Funds	Rs  1253 Crs April 1 - 28

The BSE & NSE combined weekly value of shares advancing was Rs. 25,382 crores ( previous week Rs 33,479 crs ) and the commensurate value of shares declining was Rs. 26,610 crores ( previous week Rs 14,824 crs ). This indicates a selling bias. The total weekly traded volume on the BSE was Rs. 16,070 Crores ( previous week Rs 14,648 crs ). The total traded weekly volume on the NSE was Rs. 36,760 Crores ( previous week Rs 34,018 crs ).

The week saw a weakness gripping the markets as the benchmark indices plunged below their previous supports. The fact that the indices fell on higher traded volumes is a sign of weakness. The f&o expiry saw a routine offloading process and a smooth rollover. The closing levels were near the lower band of the week and nervousness was self evident. The traded volumes were higher and the market breadth was negative, signalling a build up in downward momentum. The Sensex was boosted by Bajaj Auto, Cipla, Hind Lever, HDFC and ITC. The Sensex was dragged down by ACC, BHEL, Dr Reddy, Grasim, Guj Amb Cements, HDFC Bank, Hero Honda, Hindalco, HPCL, ICICI Bank, Infosys, L&T, Maruti, ONGC, Ranbaxy, Reliance Energy, Reliance Inds, Satyam Computers, SBI, Tisco, Telco, Tata Power, Wipro and Zee Telefilms. The Rupee ended the week at 43.53 levels ( 00.22 ) against the US $.  Overall, the week was completely in line with our expectations. Click here to view the previous weeks report.

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• The markets are likely to take note of crude prices which are sharply lower at US $ 49.72 / barrel ( previous week US $ 55.39 / barrel ). This 10 % fall is likely to ease worries on the inflation front in the near term.

• The FII inflows are continuing to remain negative as the week saw Rs. 502 Crs being pulled out of the market.

• The US $ has slipped sharply against the INR ( which was accurately forecast by us in our crude and currency newsletter ) and that will unnerve the bulls in the technology sector.

• The US fed FOMC meeting on Tuesday ( Wednesday in India ) will be an event to watch as the market players will take their cues from the Chairman's speech.

• The F&O indicators point towards a routine paring of exposure on expiry and the bulls slipping in their grip on the markets.

• Inflation figure of 5.64 % is  stagnant compared to the previous weeks figure. There are no negative / positive triggers there.

• The market breadth points towards a weak undertone as the above table indicates. Of the entire traded volumes of the week, 12 % was initiated on uptick days. That signifies a lack of buying conviction even at lower levels.

• The overseas markets have been looking for a sense of direction and the psychological levels of 10,000 & 1900 on the Dow and the Nasdaq respectively are important levels to watch.

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Technicals

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For stock specific recommendations please refer to our special edition " Flavours of the week". Click here to view the previous editions of the "Flavours of the week".

Have a profitable day.

 

Vijay L Bhambwani

Ceo :- Bsplindia.com

The author is a Mumbai  based investment consultant and invites feedback at Vijay@BSPLindia.com and  ( 022 ) 23438482 / 23400345.

SEBI disclosure -  The author has no positions in  the stocks mentioned above.

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