The Professional Ticker Reader TM

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Aug 02, 2003

Indices at 29 month highs. Sensex gains 89 points.

Highest volumes, positive breadth as previous tops are surpassed.

Weekly statistics

The value of  shares advancing was Rs. 17957 crores and the value of shares declining was Rs. 8672 crores. This indicates a broader buying bias. The total traded volume on the BSE was Rs. 7969 Crores. The total traded volume on the NSE  was Rs. 19088 Crores.

The week saw a surge in the market values as the previous resistance levels on the indices were easily surpassed and market players continued to enlarge their commitments. The traded volumes on the exchanges were higher than the previous week, market breadth was widely positive and the capitalisation of the breadth was also highly positive. This signifies a buying momentum by stronger hands and a bullish undertone in the markets. The technology sector has finally participated in the upmove and helped the indices scale higher levels. Results declared by corporates have been encouraging and the sentiments continue to remain cheerful. The Sensex was boosted by ACC, Bajaj Auto, Cipla, Colgate, Glaxo, Grasim, Gujarat Ambuja Cements, HDFC, Hero Honda, Hindalco, ICICI Bank, Infosys, L&T, MTNL, Reliance, Satyam Computers, Telco, Tisco and Zee Telefilms. The Sensex  was dragged down by BHEL, BSES, Dr. Reddy, Hind Lever, HPCL, ITC, Nestle, Ranbaxy and SBI. The rupee ended the week at 46.15 levels against the US $.

Note - The open interest in many heavy-weights has come down. That could be a possible indicator of distribution if the markets do not continue to rally with the same momentum. The put call ratio is at 0.33 : 1. This is showing an extremely high build up of long positions in the options segment.

The ongoing results will continue to influence share prices in the short term. However, the major domo trigger is the inflow of FII investments. The inflows in July been Rs 2400 crs and domestic institutions have also turned buyers to the tune of Rs 74 crs. The outlook for index heavy-weights like Reliance, Infosys, Telco, Tisco, SBI, Bajaj Auto appears positive, whereas the outlook on Hind Lever is weak. That should see the indices firm in the initial half of the week. The results season has seen positive numbers from leading corporates and that is likely to keep the sentiments bullish. Barring corrective dips, we do not foresee major falls.

The weekly bar chart of the Nifty shows a rising trend and a continuation of the rising tops and bottoms. Though this is a bullish sign, the short term momentum oscillators are pointing towards an overbought level. The Nifty 50 has been unable to surpass the 1198 intraday highs on a closing basis, which makes the psychological figure of 1200 a short term inflection point. That makes the probability of a downward correction fairly high. The slower momentum oscillators are still in an upward spiral - therefore the larger trend is likely to remain bullish - barring corrections. The weekly traded volumes were higher as compared to the previous week and the market breadth was positive. The coming week will see short term support at the 1155 levels and resistance at the 1225 levels. 

Our outlook on the Nifty is that of bullishness with a limited upside potential due to profit taking / consolidation.

Have a profitable day.

 

Vijay 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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