The Professional Ticker Reader TM

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Nov 08, 2003

Markets see - saw 200 points. Sensex gains 66 points.

Higher volumes, positive breadth as stocks rally.

Weekly statistics

The weekly BSE & NSE combined value of shares advancing was Rs. 26,188 crores and the value of shares declining was Rs. 17,432 crores. This indicates a broader buying bias. The total weekly traded volume on the BSE was Rs. 13,755 Crores. The total traded volume on the NSE was Rs. 29,977 Crores.

The week saw the market players shrug off the previous weeks bearishness and participating in the buying frenzy. The indices hit new highs before cooling off by the week end. Our investors will recall that we had advocated a resistance at the 1630 & 5125 levels way ahead of the markets and these levels are proving to be a major resistance in the near term. The trading volumes continued to be high and also made a new landmark high. The market breadth was positive for a change. However, the poor volumes on the up-tick days are a sign of concern. The technology sector showed signs of revival after a long hiatus and that is likely to continue. The Sensex was boosted by ACC, Castrol, Dr. Reddy, Glaxo, Grasim, Gujarat Ambuja Cements, HCL Tech, Hero Honda, Hind Lever, HPCL, Hindalco, Infosys, L&T, MTNL, Nestle, Ranbaxy, Satyam Computers, Tisco and Zee Telefilms. The Sensex was dragged down by BHEL, BSES, Cipla, Colgate, ICICI Bank, ITC, Reliance, SBI and Telco. The rupee ended the week at 45.28 ( + 00.04 ) levels against  the US $. Overall, the week was completely in line with our expectations.

Note - ** indicates lower outstanding position as against previous session

The put call ratio is at 0.19 : 1.

The outstanding gross long positions are Rs 9,024 crs

The markets are likely to consolidate from the current levels and selling by the short term bulls needs to be absorbed by stronger hands. Once that shift is completed, the selling momentum will ease off. The larger section of the market players is feeling a sense of disbelief that the markets have actually crossed the 5000 mark and is not convinced that the rally will last. They are therefore either offloading at higher levels are abstaining from buying at lower levels. There is also the factor that we have pointed out in the recent past about the FII buying patterns. The FII fund managers tend to return to their parent nations before christmas and the usual year end considerations witness a tapering off of the FII inflows. The rank and file investor is waiting for that event to benchmark this years activity. That explains a part of the reason why this wait and watch approach is prevalent in the markets. The FII inflows continue unabated and that is limiting the downsides in the markets. The derivatives figures are showing an easing of trading volumes and that is a sign of caution. The gross outstanding long positions are also falling and any fall below the Rs 8000 mark will be a sign of concern.

The overseas markets continue to remain firm. What interests us is the 22 month highs made by the Nasdaq, which is slightly below the psychological mark of 2000. This is likely to see a feel-good-factor in the domestic software segment. Overall, expect the markets to consolidate from the present levels. In our opinion, the bull run is still on.

The weekly bar chart of the Nifty shows a breakout above the congestion level of 1574 and a closing above that hurdle. The 1630 inflection point is proving to be a short term resistance that the markets need to surpass in order to signal the commencement of the next leg of the rally. The breakout above the 1630 mark must be accompanied by higher volumes and a highly positive market breadth. The oscillators are indicating that the markets are in a bullish zone and barring corrections, should be doing fine. On the lower side, expect the 1574 and 1546 levels to be the minor and major supports respectively in the week ahead. Watch the price / volume / breadth combination for insights into the trend determination of the markets.

Our outlook on the Nifty is that of bullishness, barring the routine corrections.

Have a profitable day.

 

Vijay 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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