-
Markets hit
by poll results. Sensex sinks 600 points.
- Higher
volumes, negative breadth as bulls bail out.
-
Weekly
statistics
The value of
shares advancing was Rs. 12,290 crores and the
value of shares declining was Rs. 27,316 crores. This
indicates a broader selling bias. The total traded volume
on the BSE was Rs. 12,518 Crores. The
total traded volume on the NSE was Rs. 27,148 Crores.
The week saw
extreme volatility from the first day itself as the elections
sprang a nasty surprise on the market players. The market
breadth was negative and the traded volumes were higher as the
selling was triggered by a sense of panic. The selling was
across the board but was exacerbated on the PSU disnvestment
candidates. The Nifty created a new record of sorts as the
index logged the biggest ever fall in a single session since
it's conception on Friday. The fact that the markets have
closed at the lower band of the weekly trade only underlines
the panic in the undertone. The Sensex was boosted
by Ranbaxy. The Sensex
was dragged down by ACC, Bajaj Auto,
Bharati Tele, BHEL, BSES, Cipla, Dr Reddy, Grasim, Guj Amb Cem,
HDFC, HDFC Bank, Hero Honda, Hind Lever, HPCL, Hindalco, ICICI
Bank, Infosys, ITC, L&T, MTNL, ONGC, Reliance, Satyam
Computers, SBI, Telco, Tata Power, Tisco, Wipro and Zee
Telefilms. The rupee ended the week at 45.62
levels ( 
00.96 ) against the US $.
Overall, the markets were entirely in line with our
expectations. Click
here to view the previous weeks file.
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Our investors
will recall that we had advocated an entirely news driven
market in the previous week, and that has come about. Click
here to view the previous weeks file. The markets are
still likely to be driven by political compulsions and
expectations. The nervousness in the markets is caused by
statements by certain political leaders which have not gone
down well with the investing population. Since damage control
has been initiated since then, we expect that the sentiments
should recover in the near term. Should the Congress party
exert it's influence and forge ahead with it's reformist
approach ( investors must realise that the reforms in the
country were initiated by the congress itself ), sentiments
will jump in the short term. A wait and watch approach needs
to be maintained. The F&O indicators are showing a healthy
outstanding position and traded volumes have seen a quantum
jump. The FII's have been showing a reverse flow on
investments in the country and that is a worrying factor in
the short term. Our prime concern remains the sky rocketing
crude oil prices which are threatening to jeopardise the the
economic recovery process. Our paid subscribers may please
standby for a very detailed special report on the future
course of action, which will give a clear blue print for
profits in the changed scenario.
The overseas
markets have shown weakness which is likely to exert a
downward pressure on the domestic markets, thereby limiting
the upsides effectively. Overall, we expect a week full of
expectations and news driven sentiments. The likelihood of an
improvement is fair.
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The weekly bar
chart of the Nifty shows the downward sloping channel which we
have been advocating in the recent past, and the index now
firmly entrenched in the same. The momentum oscillators are
showing a fall and the slower trend oscillators are also in a
downward spiral. The immediate support is at the 1525 - 1545
levels which is the longer term SMA and the probability of a
bounce back is fair. However, it must be remembered that the
upsides are likely to see selling pressure from the nervous
bulls. Therefore, the near term outlook is marginally weak.
Only a sustained closing above the 1770 levels will signal a
trend reversal.
Our outlook on
the Nifty is that of bounceback on the back of a relief rally
in the near future. However, absolute caution needs to be
exercised in the coming week.
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- Have a profitable day.
-
- Vijay L
Bhambwani
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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