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April 21, 2009

Markets recover further. Sensex gains 51 points.

Expect slower upmove as upward momentum tiring down.

Weekly statistics

Indices Open High Low Close Change
BSE - 30 3304 3364 3281 3354 + 50.90
BSE - 200 419 425 413 423 + 04.25
NSE - 50 1046 1059 1033 1056 + 09.80
Dow  Jones 9117 + 54 Nasdaq 1626 (-) 1 FTSE

4134 (-) 17
Advances 6484 Declines 5688 Put / Call ratio - 6707 : 16979
FII  Investments Rs + 858 Crs Jun 2 - 12  Domestic Funds Rs (-) 12 Crs Jun 2 -12

The  value  of  shares  advancing  was Rs. 9965 crores  and  the  value  of  shares  declining  was Rs. 8579 crores. This  indicates  a broader  buying  bias. The  total  traded  volume  on  the BSE  was Rs. 5297 Crores. The  total  traded  volume  on  the NSE  was Rs. 13401 Crores.

The week  that was -

The week saw a firm start as the markets opened with continued optimism after the US markets signaled improved chances of a recovery. The software sector gained small ground as the Rupee showed signs of stabilising against the US $ and economic data turned better. The Maruti IPO saw a feel good factor even as the monssons cheered sentiments. The traded volumes were steady and the market breadth was positive. The put call ratio remained positive, though the total outstanding contracts shrank in volume terms. The Sensex was  boosted  by Bajaj Auto, BHEL, BSES, Castrol, Cipla, HCL Tech, HDFC, Hero Honda, Hind Lever, HPCL, Hindalco, ITC Ltd, L&T, Nestle, Ranbaxy  and Telco. The Sensex was dragged  down  by Colgate, Dr. Reddy, Glaxo, SBI, Tisco and Zee Telefilms. The  rupee  ended  the week at 46.71 levels  against  the  US $.

Likely  triggers -

The markets are likely to see a consolidation on the back of the profit sales seen on the US & UK markets ( ref table above ). The monsoon factor has been discounted and built into the prices. The Maruti IPO is likely to see a diversion of funds from the secondary markets to the primary markets. The impact is however likely to be very limited. The possible announcement of general elections in February 2004 is likely to cause increased volatility in the markets, which are already pausing for breath. The assurance by the US government that outsourcing of IT services from Indian firms will not be stopped is likely to cheer stocks in the sector. Much will also depend on the crude oil prices in the international markets. Overall, expect a range-bound week ahead.

Derivatives watch 

Saturated scrips                                             Gainers and losers by open interest

Scrip Open int  % age of market limit    Scrip Open interest  Change 
Digital Global 741600 89   ACC 2509500 142500
HPCL 6497400 76   BPCL 2411200 335500
IPCL 717600 83   Digital 741600 -110800
Mastek 475600 87   HPCL 6497400 - 87100
Polaris 1614200 96   Reliance 4977600 526800
SCI 2889600 100   Satyam  4509600 -284400
Tisco 10670400 82   SBI 6739000 178000
Nifty June 3117800 N/a   Telco 4398900 -237600
Nifty July 420800 N/a   Tisco 10670400 -376200

It maybe noted that the Nifty near month futures are trading at a 11 point discount to cash - signaling a build up of bearish positions in the markets.

Technicals -

The weekly bar chart of the Nifty shows a continued rising trend as the index trades above it short and long term averages. The moving average crossover signal has not been generated yet and that confirmatory move will probably come above the previous high of 1106. In the interim, however, the 1060 - 1065 remains a short term hurdle that the markets need to cross before a continued upmove can be seen. On the lower side, the near term support will come at the 1028 - 1030 levels which need to be watched closely. 

Nifty 50 - Weekly chart

Our outlook on the Nifty is that of a consolidatory move and therefore, aggressive long positions are not advisable till the index crosses the 1070 levels. 

Your call  of  action -

We advocate a high degree of caution in the coming week as the markets are likely to be volatile in their movements and the upsides maybe capped in the absence of heavy volumes based buying. Only short term trading positions should be created afresh. Hold the existing long positions with a tight 2 % trailing stop loss.

For stock specific recommendations, please refer to our special edition - Flavours of the week.

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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