The Professional Ticker Reader

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July 12, 2003

Markets rally further. Sensex gains 54 points.
Higher volumes, negative breadth as Infosys springs surprise.: Weekly statistics

Indices	Open	High	Low	Close	Change
BSE - 30	3631	3714	3604	3676	+ 53.92
BSE - 200	459	466	454	461	+ 03.93
NSE - 50	1138	1170	1134	1161	+ 23.20
Dow Jones	9120 + 49	Nasdaq	1734 + 70	FTSE	4058 + 33
Advances	6183	Declines	7226	Put / Call ratio - 7633 : 28146
FII Investments	Rs + 1500 Crs July 1 - 10		Domestic Funds	Rs (-) 54 Crs July 1 - 10

The value of shares advancing was Rs. 14562 crores and the value of shares declining was Rs. 8637 crores. This indicates a marginal selling bias. The total traded volume on the BSE was Rs. 7271 Crores. The total traded volume on the NSE was Rs. 16428 Crores.

The week that was

The week saw a continued upmove in the indices especially after the Infosys results were declared. The earnings numbers were a pleasant surprise, and coupled with the listing of Maruti, it was a double bonanza for sagging markets. The traded volumes continued to remain higher than the 10 day average as resources were churned out of old economy small cap stocks into technology counters. The market breadth was negative as the declines continued to outnumber advances and that is a sign of slight concern. The capitalisation of the breadth was positive as frontline counters saw polarised buying interest. The Sensex was boosted by ACC, BSES, Cipla, Colgate, Glaxo, HCL Tech, HDFC, Hindalco, ICICI Bank, Infosys, L&T, Satyam Computer, SBI, Telco, Tisco and Zee Telefilms. The Sensex was dragged down by Bajaj Auto, BHEL, Castrol, Dr. Reddy, Gujarat Ambuja Cements, Hind Lever, HPCL, ITC, MTNL, Nestle, Ranbaxy and Reliance. The rupee ended the week at 46.10 levels against the US $.

Derivatives watch

NSE futures saturation list		NSE futures change in open intrest
BPCL	71 %	ACC	63000
HPCL	72 %	BHEL	(-) 88800
Maruti	72 %	Hind Lever	(-) 24000
Mastek	98 %	HPCL	(-) 106600
Nalco	71 %	Reliance	(-) 331200
NIIT	96 %	Satyam Computers	981600
Polaris	100 %	SBI	(-) 188000
SCI	104 %	Telco	(-) 151800
Tata Power	66 %	Tisco	(-) 610200
Telco	65 %
Tisco	81 %

*** I-FLEX, ONGC, RANBAXY, SATYAM & WIPRO Open Intrest UP By 30%, 8%, 7%, 20%, & 25%, respectively.
*** BHEL, IPCL, RELIANCE, & TISCO, Open Intrest Down By 7%, 10%, 6%, & 5%, respectively.

Likely triggers

The upcoming results will continue to be the major trigger for the markets. The pace set by Infosys shows an optimism for the technology sector, however, the same pace must be maintained by the other heavy-weights like Satyam Computers, Wipro and HCL Tech among others. Only then will the trend in the software sector be confirmed as reversed. The strengthening rupee vis-a-vis the US $ will be a sign of caution as earnings pressure will continue. Should the Rupee appreciate further, expect the software counters' upsides to be limited. The market breadth is also a sign of concern for us as the figures are negative for a prolonged phase. That shows selling pressure on higher levels. Of the total traded volumes during the entire week on the NSE & BSE combined basis, 64 % of the volumes were transacted on negative market breadth. That is a sign of concern. While it may not necessary be a bearish indicator, the upsides will tend to be limited unless the buying is more persistent and across the board. The put / call ratio is also heavily tilted towards the long side and is appearing overbought. Our overall view remaining optimistic, we advocate initiating fresh long positions in small quantities only.

Technicals

The weekly bar chart of the Nifty shows a continued rising tops and bottoms formation which indicates a rising trend. This week, the Nifty has cleared the 1155 hurdle which is a sign of optimism, the same was accompanied by higher volumes though with a negative market breadth. Historically, the next resistance will come at the 1187 - 1193 levels and that hurdle needs to be surpassed to effectively continue the upmove. The short term momentum oscillators are in an overbought zone and raises the probability of a downward correction. The support on the downside will come at the 1125 - 1130 levels in the immediate future. It is important that the Nifty ( cash segment ) does not fall below the 1115 levels in this week.

Our outlook on the Nifty is bullish with a fair possibility of downward correction. Hold existing long positions with a maximum 2 % trailing stop loss and enter fresh long positions in small quantities only.

Your call of action

Stick to safer sectors like automobiles, pharmaceuticals, engineering, telecom and select PSU disinvestment candidates. Buy afresh in small lots and await bigger moves, rather than bigger lots for smaller gains. For stock specific recommendations, please refer to our special edition - "Flavours of the week."

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Have a profitable week.

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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