The Professional Ticker Reader TM

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Feb 21, 2004

Markets show weak underbelly. Sensex dives 161 points.

Higher volumes, negative breadth as rally proved shortlived.

Weekly statistics

The BSE & NSE combined weekly value of  shares advancing was Rs. 20,163 crores and the value of shares declining was Rs. 22,934 crores. This indicates a broader selling bias. The total traded weekly volume on the BSE was Rs. 13,864 Crores. The total weekly traded volume on the NSE  was Rs. 29,318 Crores.

The week saw a reversal of sentiments as the gains of the previous week were unsustainable due to nervousness in the bulls. The lack of buying conviction among the bulls which we have been pointing out to our investors, saw sentiments crack under pressure and liquidation at higher levels. The traded volumes were steady and the market breadth was negative. The undertone was clearly shaky and the upcoming IPO's were a major reason for the selling pressure. The Sensex  was boosted by BHEL, BSES, Grasim, Hero Honda, ITC, L&T, ONGC and Tisco . The Sensex was dragged down by ACC, Bajaj Auto, Cipla, Dr Reddy, Gujarat Ambuja Cements, HDFC, HDFC Bank, Hind Lever, HPCL, Hindalco, ICICI Bank, Infosys, Ranbaxy, Reliance, Satyam Computers, SBI, Telco, Tata Power and Wipro . The rupee ended the week at 45.25 levels ( - 00.02 ) against  the US $. click here to view the previous weeks files

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The markets are likely to be under selling pressure at higher levels due to the liquidity crunch caused by the huge public issues opening soon. The impeding expiry of February series and the last installment of advance tax will also play a part in selling activity. Being the year end, there will be squaring up of positions from marginal traders who will want to keep low / zero open positions. The FII inflows have continued to flow in and the domestic mutual funds have been relentless sellers. The F&O indicators are also pointing towards offloading at higher levels and unless the open interest rises, the bears are likely to take advantage of the lower margin slabs and short the markets lower.

The overseas markets have been stagnant and are unlikely to have a major impact on the directional guidance to the domestic markets. As we had advocated last week, the outlook remains that of selling pressure at higher levels. click here to view the previous weeks files

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The weekly bar chart of the Nifty shows a fall from the previous congestion level of 1935 which was advocated by us as a meaningful short term trend determinator last week. We had indicated that a sustainable upmove will be possible only if the Nifty closes above the 1965 levels with higher volumes and a positive market breadth. The support levels advocated last week were at the 1840 and the Nifty saw an intra-week low of 1831 !! click here to view the previous weeks files The coming week will see a support at the 13 week SMA at the 1820 levels and should that support be violated, expect the markets to test the 1750 levels in the short term. On the upsides, we don't expect the markets to rally beyond the 1945 levels unless high volumes on the upsides are seen. Keep watching the price / volume / market breadth combinations.

Our outlook on the Nifty is that of selling at higher levels and a cautious / nervous undertone. Avoid fresh aggressive purchases.

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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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