The Professional Ticker Reader TM

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Feb 14, 2004

Markets recover on institutional boost. Sensex gains 225 points.

Higher volumes, positive breadth as old economy stocks rally.

Weekly statistics

The combined weekly value of  shares advancing was Rs. 27376 crores and the value of shares declining was Rs. 12396 crores. This indicates a broader buying bias. The total weekly traded volume on the BSE was Rs. 13076 Crores. The total traded volume on the NSE  was Rs. 26899 Crores.

The week saw a recovery in the markets as the institutions inspired a rally in values. The market breadth was positive and the traded volumes were higher and the quality of the upmove was superior. The announcement of the PSU IPO dates proved to be a positive trigger as we had advocated. The Sensex  was boosted by ACC, Bharati Tele, BHEL, BSES, Cipla, Grasim, Gujarat Ambuja Cements, HDFC Bank, HDFC, Hero Honda, Hind Lever, HPCL, Hindalco, ITC Ltd, L&T, MTNL, Ranbaxy, Reliance, Satyam Computers, SBI, Telco, Tata Power, Tisco, Wipro and Zee Telefilms. The Sensex  was dragged down by Bajaj Auto, Dr Reddy, ICICI Bank and Infosys. The rupee ended the weekly at 45.23 levels ( + 00.05 ) against  the US $. The week was in line with our expectations, click here to view the previous weeks file.

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The markets are likely to be governed by institutional activity as the retail participation is thin. The coming week will see mega public issues of PSU stocks at attractive levels and that is likely to see a divergence of resources from the secondary market to the primary market. Even if there is no selling pressure on financial considerations, the mood is definitely likely to be that of participation in the IPO's. We foresee thinner volumes in the secondary markets and therefore higher volatility, as small purchases and sales will swing prices significantly. The FII inflows have been a silver lining whereas the domestic mutual funds are net sellers. The F&O positions are showing the creeping rise in open interest and that shows a gradual return of the bulls.

The overseas markets are steady and therefore we expect no significant influence on the domestic sentiments on this account. Overall, we expect the week to be steady with selling pressure at higher levels.

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The weekly bar chart of the Nifty shows the index getting support at the 13 week SMA and bouncing back. That is a typical sign of a bull market. Our investors will recollect that we have been advocating the 1700 - 1750 levels as a make or break support since Jan 20, 2004 click here to view the previous weeks files. The downward correction that lasted for 5 weeks will be deemed to have terminated of the Nifty closes above the 1965 levels and stay there. The upmove should be accompanied by heavier volumes, positive market breadth, and higher outstanding long positions. On the lower side, we expect the support to come at the 1840 in the coming week.

Our outlook on the Nifty is that of cautious optimism. Trades maybe initiated on lower volumes.

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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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