The Professional Ticker Reader TM

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Dec 06, 2003

Markets consolidate further. Sensex gains 87 points.

Higher volumes, positive breadth as FII's continue investing.

Weekly statistics

The value of  shares advancing was Rs. 23,874 crores and the value of shares declining was Rs. 14,703  crores. This indicates a broader buying bias. The total traded volume on the BSE was Rs. 13,266 Crores. The total traded volume on the NSE  was Rs. 25,406 Crores.

The week saw a fresh bout of  bullishness as the FII's continued to pump in money into domestic markets. The domestic mutual funds also turned net buyers as the above table indicates. The market breadth was positive and traded volumes were healthy. The last day of the week saw nervous offloading of positions by weaker bulls as the 7 session winning spree came to a panic struck end. The indices closed at near their lower intra week band and that shows a lack of strong buying conviction on the upsides. The week belonged to the old economy sector as the weak US $ dampened technology sentiments. This aspect was strongly emphasised in the last edition of the "Flavours of the week". The Sensex was boosted by Bajaj Auto, BHEL, Dr Reddy, Gujarat Ambuja Cements, GAIL, HDFC, Hero Honda, Hind Lever, HPCL, Hindalco, ICICI Bank, ITC, L&T, Ranbaxy, Reliance, Telco and Zee Telefilms . The Sensex  was dragged down by ACC, BSES, Grasim, Infosys, MTNL, ONGC, SBI, Tisco and Wipro . The rupee ended the week at 45.60 levels ( + 00.25 ) against  the US $.

Changes in outstanding futures positions.

Note - The put call ratio is at 0.23 : 1.

The value of outstanding long positions (gross) is Rs 10,473 crs.

The markets are likely to react to the weekend weakness in the US markets and open lower on Monday. The sentiments thereafter will depend on the FII inflows, domestic funds and local operator actions. The political front has seen a positive trigger in the BJP sweeping three states and the FM promising a "good budget". The stability of a continous governance and reforms process will see the markets have a "feel good factor". The weakness in the US $ will affect the sentiments for technology stocks. This will create a drag on the indices due to the higher weightage of technology. The derivatives segment saw a paring of the outstanding long positions due to stop losses getting activated and nervousness prevailing in the sentiments. The commensurate long positions have been created in the options segment and that shows a tendency for value buying at lower levels. Since December is the year end for FII's, we feel there maybe a support at lower levels from these players to maintain a positive NAV.

The overseas markets are showing a mixed trend as the above table indicates. The November job data has seen less than optimal numbers and that unnerved the investors in the US. Our concern, which we had spelt out in the previous edition about rising gold prices in the international markets and rising interest rates in Europe point towards a profit taking in global equity markets. Overall, expect a consolidation phase in the markets.

The weekly bar chart of the Nifty shows a higher bottom and top as compared to the previous week even as the closing has been above the previous resistance point of 1635 levels. As long as the Nifty manages to close above the 1600 levels in the coming week, this is a minor correction in a bull run. Though a bigger fall in the index does not signal a trend reversal, the recovery in sentiments will take that much longer. As we have been pointing out in our daily and weekly editions, our investors will recollect that the 1685 levels were advocated by us as an immediate resistance level. That resistance is still the litmus test for the markets to surpass convincingly with higher volumes and positive market breadth, before a clear bullish call can be made on the markets. On the downside, watch the 1600 levels keenly.

Our outlook on the Nifty is that of optimism as we feel this is a routine bull market correction. The initial half of the week maybe nervous, barring unforeseen circumstances, there should be a rapid recovery in the near term.

Have a profitable day.

 

Vijay L 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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