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June 18, 2005

Markets rally for seventh week. Sensex gains 125 points

Steady volumes, negative breadth as midcaps undergo profit sale

Weekly statistics

Indices	Open	High	Low	Close	Change
BSE - 30	6790	6933	6757	6906	124.53
BSE - 200	896	909	892	897	02.70
NSE - 50	2090	2135	2081	2123	32.80
Midcap 200	3068	3108	2990	3005	58.35
CNX-IT	2907	2963	2887	2953	57.05
NCDEX Agri	1240	1249	1240	1249	07.94
Dow Jones	10623 110	Nasdaq	2090  27	FTSE	5078 47
Advances	6543	Declines	10169	Put / Call trades - 84495 : 143190
FII Investments	Rs  540 Crs June 1 - 16		Domestic Funds	Rs  235 Crs June 1 - 16

The BSE & NSE combined weekly value of shares advancing was Rs. 19,414 crores ( previous week Rs 18,938 crs ) and the commensurate value of shares declining was Rs. 12,259 crores ( previous week Rs 13,577 crs ). This indicates a selling bias. The total weekly traded volume on the BSE was Rs. 10,948 Crores ( previous week Rs 10,830 crs ). The total traded weekly volume on the NSE was Rs. 21,144 Crores ( previous week Rs 22,011 crs ).

The week saw a volatile undertone as the sentiments gyrated in pendulum like fashion. While the markets seem to have rallied on a week-on-week basis, the market breadth was outright weak. The traded volumes were steady and barring the block deals, this factor shows a lack luster retail participation. The midcap segment crumbled under selling pressure in the last two days of the week and caused anxiety. The IT and NCDEX agri indices rose smartly as the composite scrips clawed higher. The Sensex was boosted by Bajaj Auto, Bharti Tele, Dr Reddy, HDFC Bank, Hindalco, Hind Lever, HDFC, ICICI Bank, Infosys, L&T, ONGC, Reliance Energy, Reliance Inds, Satyam Computers, Tisco, TCS and Wipro. The Sensex was dragged down by ACC, BHEL, Cipla, Guj Ambuja Cements, Hero Honda, ITC, MTNL, Maruti, NTPC, Ranbaxy, SBI, Telco and Tata Power. The Rupee ended the week at 43.56 levels ( 00.01 ) 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 at their lifetime peaks at US $ 58.47 / barrel ( previous week US $ 53.54 / barrel ). This is in line with our forecast that crude will turn bullish after a breakout above the 56 $ mark.

• The FII inflows are negative during this week by Rs 1,138 Crs ( accounting for block deals also ). Overall FII investment outlook appears positive.

• The F&O indicators point towards a 8 % increase in open interest on marginally higher volumes and the Nifty PCR having scaled up to the 1.46 : 1 levels.

• Inflation figure of 4.22 % is lower than the previous weeks figure of 5.20 %. Though a positive trigger for now, higher crude prices can change all that rapidly.

• The market breadth points towards a selling bias, particularly on the mid-cap segment. This selling pressure can have a cascading effect on the frontline counter as well, if not halted soon. Of the entire traded volumes of the week, 58 % was initiated on uptick days - the fall has occurred on Thursday and Friday alone. That signifies a bullish bias for now.

• The overseas markets have been firm and the data emanating from the US markets seems to be digested well by the international investors. That will have a positive rub off on the domestic market sentiments in the coming week too.

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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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