The Professional Ticker Reader TM

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Aug 23, 2003

Markets zoom to 30 month highs. Sensex gains 204 points.

Higher volumes, positive breadth as old economy stocks rally.

Weekly statistics

The value of  shares advancing was Rs. 19369 crores and the value of shares declining was Rs. 10498 crores. This indicates a marginal selling bias. The total traded volume on the BSE was Rs. 9136 Crores. The total traded volume on the NSE  was Rs. 20941 Crores.

The week saw a smart rally as the benchmark indices zoomed upwards and the technology stocks finally awoke from their lethargy. The indices have hit 30 month highs and traded volumes have been steady. The market breadth shows a tendency to book profits at higher levels. The main worry that I have expressed in the recent past has been on the price / volume co-relation. The volumes have been higher on falling market days and upmoves are achieved with relatively lower volumes. Of the entire volumes traded on the BSE & NSE, 43 % was transacted on negative breadth days ( Aug 19 & 22 ). The indices are now perched at the same levels where the stock scam of 2001 was unearthed. The Sensex was boosted by ACC, Bajaj Auto, BHEL, BSES, Cipla, Colgate, Dr. Reddy, Grasim, HCL Tech, HDFC, Hero Honda, Hind Lever, HPCL, Hindalco, ICICI Bank, Infosys, ITC, L&T, MTNL, Nestle, Ranbaxy, Reliance, Satyam Computers, SBI, Telco and Tisco. The Sensex  was dragged down by Castrol and Zee Telefilms. The rupee ended the week at 45.82 ( + 00.07 ) levels against  the US $.

Note - Put call ratio stands at = 0.49 : 1

The markets have reached the levels which we had advocated last week. The overseas markets have been largely lack-luster which makes the domestic markets out-performers in the international scenario. The impeding expiry of the August series of the F&O segment is showing an unloading of bull positions. What is noteworthy is that unlike the previous months, not as many positions are being rolled over to the next month - a sign that shows a lack of buying conviction at higher levels. The put call ratio is now at equilibrium levels which shows a tilt towards bull unloading. There are reports that automobile companies are contemplating a hike in auto prices - a development which may affect festive sales. Steel stocks are showing signs of cooling off after the dumping probe and these sectors have a respectable weightage in the indices. We expect the markets to consolidate in the coming week and see shares changing hands from weaker bulls to stronger institutional hands. FII inflows have continued to be positive and as long as the Rupee continues to strengthen, I believe the inflows will continue. Overall, our outlook is positive for the week ahead - barring a corrective fall which should be due soon.

The weekly bar chart of the Nifty shows a continued rising tops and bottoms as the markets continue their upward spiral. The 1280 resistance was surpassed in the previous week and the next minor resistance at the 1317 levels attracted profit taking. What is clearly apparent from the charts is that the index has run steeply above it's short term moving averages and the short term momentum oscillators are now in the overbought zone for an extended period of time. Though this phenomena is routine in the formative phases of new bull markets, we advocate abundant caution in building fresh long positions. Technically speaking, the Nifty has the possibility of scaling heights of 1390 in the near future, whereas support on the downside exists at the 1230 levels.

Our outlook on the Nifty in the coming week is that of caution as the markets appear over-stretched. The overall outlook remains positive.

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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