The Professional Ticker Reader TM

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Feb 07, 2004

Markets rebound from support. Sensex gains 91 points.

Lower volumes, negative breadth as rally finds fewer takers.

Weekly statistics

The weekly BSE & NSE combined value of shares advancing was Rs. 19,756 crores and the value of shares declining was Rs. 15,227 crores. This indicates a broader selling bias. The total weekly traded volume on the BSE was Rs. 11,204 Crores. The total weekly traded volume on the NSE was Rs. 23,804 Crores.

The markets saw a choppy week as investors and traders preferred to lighten up positions at higher levels. The traded volumes were lower than the previous week and the market breadth was negative. The technology sector was a pleasant surprise as buying emerged at lower levels. Being heavily weighted in the indices, the technology stocks lifted the indices which ended in positive territory on a week-on-week basis. The Sensex was boosted by Bajaj Auto, Bharati Tele, BHEL, BSES, Gujarat Ambuja Cements, HDFC Bank, Hero Honda, HPCL, Hind Lever, Hindalco, ICICI Bank, Infosys, Reliance, Satyam Computers, SBI, Telco, Tata Power and Tisco. The Sensex  was dragged down by Cipla, Dr Reddy, Grasim, HDFC, ITC, L&T, ONGC, Ranbaxy and Zee Telefilms. The rupee ended the week at 45.28 levels ( + 00.03 ) against the US $. Overall, the markets moved in line with our expectations. Click here to view the previous weeks report.

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The markets are likely to seek a clear sense of direction as the dissolution of the lok sabha is likely to result in a choking of triggers for the markets. The only guidance that is likely to emanate from New Delhi will be the finalisation of the PSU disinvestment dates and IPO prices for ONGC & GAIL. FII inflows are also likely to be the beacon for the trading community in the coming weeks. The domestic mutual funds are also buyers and that will cushion the downsides. The F&O segment shows a lower open interest in the last few weeks. The announcement of the dates for the ONGC & GAIL in the month of March is a positive trigger. The price / volumes / breadth will be the leading indicator of the market trends in the days to come.

The overseas markets are steady and that will restrict the downsides in the near term. Overall, expect a cautious undertone ahead.

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The weekly bar chart of the Nifty shows a bar reversal as the closing of the index is higher than the opening, after taking support at the short term SMA. The 1750 levels from where the markets are bouncing upwards are a stable support in the near term and also coincides with the 13 week SMA. The falling bottoms and tops formation continues and only above a closing of 1875 with higher volumes and positive market breadth, will a short term rally commence. Should the index fall below the 1750 levels, we expect support at the 1700 levels in the near term. As we have been advocating since a few weeks, this is the first meaningful correction after November ' 03 and that fact is corroborated by the momentum oscillators. Last week we had advocated that the upsides would be limited to 1860. Click here to view the previous weeks report.

Our outlook on the Nifty is that of caution with the first half of the week seeing some bullishness.

Top I Derivatives guide I Likely triggers I Technicals I Reco's I

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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