The Professional Ticker Reader TM

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July 26, 2003

Markets rebound with vengeance. Sensex gains 79 points.

Higher volumes, positive breadth as correction terminates.

Weekly statistics

The value of  shares advancing was Rs. 14203 crores and the value of shares declining was Rs. 8872 crores. This indicates a broader buying bias. The total traded volume on the BSE was Rs. 6796 Crores. The total traded volume on the NSE  was Rs. 16363 Crores.

The week saw a corrective fall in the beginning of the trade as the much awaited correction at the 3750 & 1180 levels was advocated by a large section of the investing population. However, the correction was sharp and ended equally rapidly as buying emerged on Wednesday itself, aided by good corporate earnings and FII buying. Banking, technology, automobiles and telecom sector shares gained the most as PSU disinvestment stocks were relatively subdued. The traded volumes were slightly lower as compared to the previous week, since volumes were lower on downward correction days. However, the quality of buying was improved due to 66 % of the entire traded volumes being transacted on uptick days - that too with positive market breadth. This is a major improvement over the previous weeks figures. The Sensex  was boosted by ACC, BSES, Gujarat Ambuja Cements, HCL Tech, HDFC, Hind Lever, Hindalco, ICICI Bank, Infosys, MTNL, Nestle, Reliance, Satyam Computers, SBI and Zee Telefilms. The Sensex  was dragged down by Bajaj Auto, BHEL, Castrol, Cipla, Colgate, Dr. Reddy, Glaxo, Grasim, Hero Honda, HPCL, ITC, L&T, Ranbaxy and Telco. The rupee ended the week at 46.12 levels against the US $.

*** GRASIM, TELCO, &  WIPRO OPEN INTREST UP BY 10%, 5%, & 4%, RESPECTIVELY.

*** ACC, BHEL, ICICI BANK, INFOSYS, SATYAM OPEN INTREST DOWN BY 19%, 14%, 12%, 16%, & 19%,  RESPECTIVELY.

The next week will be governed by results, expiry of derivatives contracts and the continuation of FII investments. The markets have shown strong resilience and upward bias inspite of volatility in the overseas markets. The earnings season has brought good news overall and FII inflows have been strong. The only negative factor has been the PSU disinvestment hurdles which are dampening the market sentiments slightly. Reliance Industries & Hind Lever results will be a major event due to the weightage of these counters on the indices. The analysis of the derivatives segment shows a slight reduction in open interest in the futures markets due to the expiry of the July contracts, with a commensurate rise in the outstanding options contracts. This is a routine phenomena and the put call ratio shows a sobering down to 0.39 : 1 levels from the previous fortnights highs. That makes the probability of the upmove being sustainable slightly higher. Overall, we expect the sentiments to remain positive barring corrective selling.

The weekly bar chart of the Nifty shows a reversal of the correction as the closing of the last bar is higher than the opening after a sharp selloff downwards. The traded volumes have been more or less stagnant and the oscillators are pointing towards continued bullishness. The previous top of 1176 is the next immediate hurdle for the Nifty to surpass. The momentum oscillators are still in the overbought zone, which is typical of bull markets where these oscillators are overbought for extended periods of time. The next week should be a crucial one for the markets as the trend will be determined further and derivatives are slated to expire on Thursday.

Our outlook on the Nifty is that of bullishness as long as it stays above the 1132 & 1115 supports - the breakout above the 1176 levels will be a further confirmation of the bullishness.

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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