The Professional Ticker Reader TM

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Oct 26, 2003

Markets tailgate before Diwali. Sensex sheds 128 points.

Higher volumes, negative breadth as stocks come under hammer.

Weekly statistics

The value of  shares advancing was Rs. 15,584 crores and the value of shares declining was Rs. 24,007 crores. This indicates a broader selling bias. The total traded volume on the BSE was Rs. 12,248 Crores. The total traded volume on the NSE  was Rs. 27,401 Crores.

The week saw a bearish trend descend on the sentiments as the retail investors resorted to profit taking at higher levels. The market breadth was negative and the traded volumes were higher. It maybe noted that the weekly figures include the mahurat session and therefore the numbers maybe slightly exaggerated. The technology and PSU sectors came under a cloud as disinvestment blues and US $ rates were a major worry on the sentiments. The index heavy-weights came under selling pressure too and that is a cause for minor concern. As we have been advocating, the markets are witnessing a post results selloff as no further significant corporate announcements are expected for another quarter. The Sensex  was boosted by BSES, Gujarat Ambuja Cements, ICICI Bank and Zee Telefilms. The Sensex  was dragged down by ACC, BHEL, Castrol, Cipla, Colgate, Dr Reddy, Grasim, HCL Tech, HDFC, Hero Honda, Hind Lever, Hindalco, Infosys, ITC, L&T, MTNL, Nestle, Ranbaxy, Reliance, Satyam Computers and Tisco. The rupee ended the week at 45.32 levels against  the US $.

Note - ** = signifies lower levels as compared to the previous session.

The put call ratio is at 0. 29 : 1.

Outstanding long positions ( Gross ) total Rs. 11,496 crs

The markets are likely to see a nervous trend ahead, though the larger picture will remain bullish. The retail segment has been booking profits ahead of the much hyped psychological barrier of 5,000 levels on the Sensex. The considerations also being locking in profits and cash ahead of the festive season. The post result sell-off is a normal phenomena and money is likely to continue to flow out of stocks where the numbers are out and into those stocks where the results are still pending. The software and PSU segment may continue to exert pressure on the benchmark indices, whereas the steel, automobiles, MNC pharmaceuticals, energy, and cement stocks maybe dark horses in the markets. The F&O segment shows a continued optimism as the PCR ( put / call ratio maintains levels of 0.29 : 1) and the gross outstanding poistions going up by almost Rs 2,000 crs on Friday. Of the entire traded volume during the week, only 24 % was traded on bullish market breadth days and the remaining on bearish breadth days. These are signs of nervousness in the undertone in the short term. The impeding expiry of the October F&O series will also be a major trigger for the markets to see some squaring up.

The overseas markets are also showing signs of nervousness as the short term supports are being tested on the downsides and should this trend accelerate, the US & UK markets are likely to witness further profit taking. ( The overseas markets are covered in greater detail in the global market outlook section ). Overall, expect a cautious outlook in the coming week.

The weekly bar chart of the Nifty shows a major profit taking on the indices as the intra-week fluctuation has been a whopping 140 points !! Clearly, the week has not been for a faint hearted investor / trader. The fall has been accompanied by heavier volumes and a negative market breadth which is an area of concern. The oscillators are in the overbought levels and that implies that upsides will be corrective in nature, till such time as the previous tops are surpassed. The 1574 levels on the Nifty need to be watched for a breakout and on the lower side, expect a good support on the 1429 on a weekly basis. Should the Nifty hit these low levels, expect a significant selling pressure to emerge on the broader markets.

Our outlook on the Nifty is that of cautiousness and large scale buying should be avoided for now.

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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