The markets opened with the BSE 30 sensex at 3051 levels, saw a high of 3200 levels and low of 3050 levels, before closing at 3180 levels, thereby gaining 131 points. The advance decline ratio was at 6361 : 5167. The value of shares advancing was Rs. 13929 crores and the value of shares declining was Rs. 7842 crores. This indicates a broader buying bias. The total traded volume on the BSE was Rs. 6465 Crores. The total traded volume on the NSE was Rs. 15439 Crores. The week that was :- The week opened with a firm footing and ended the innings with a strong 131 point gain as buying momentum accelerated. The opening levels of the week on the indices were also the intra-week lows of the week which signifies an underlying strength in the undertone. The indices are trading at their 7 week highs and have gained inspite of losses on the software counters. There has been a rapid shift in the investment patterns as institutional players shuffled funds into old economy stocks. Traded volumes have increased by approximately 20 % on a week-on-week basis. Of the entire traded volumes on both exchanges, 18 % has been transacted on downtick days and 82 % on uptick days. The Sensex was boosted by ACC, Bajaj Auto, Cipla, Dr. Reddy, Gujarat Ambuja Cements, HCL Tech, HDFC, Hind Lever, HPCL, ICICI Bank, ITC Ltd, L&T, Ranbaxy, Reliance Inds, Satyam Computers, SBI, Tisco and Zee Telefilms. The Sensex was dragged down by BSES, Colgate, Glaxo, Hero Honda, Hindalco and Nestle. The rupee ended the day at 47.07 levels against the US $. Likely triggers :- The markets are clearly in bullish hands as we had expected / forecasted. The activity on the old economy suggests that any selloff in the technology sector will be offset by buying across the old economy heavy-weights. The FII investment figures are bullish and the outlook on the global financial markets is improving. That is likely to see a feel-good-factor spreading to the domestic markets also. The traded volumes have increased by 25 % which is a heartening sign and the put call ratio remains tilted in favour of the bulls, though the absolute number of contracts have shrunk from their intra-week highs. The US $ is recovering of late and that will slow down the fall in technology stocks in the short term. This is likely to ensure that downsides remain limited in the short term. Overall, expect a firm week ahead, barring the much needed short term corrections. Technicals :- Please stay online to enable loading of graphics from our servers. The weekly bar chart of the Nifty shows a breakout from the downward sloping channel in December 2002 and a subsequent fall in the channel. However, the Nifty has failed to violate the 920 low of November 2002 and therefore a lower bottom was not made. That makes 920 a strong base. The Nifty has closed slightly below it's 52 week moving average and that will be the short term trend determinator, there are also minor resistance points at 1012, 1022 and 1038 levels which will act as an overhead supply zone for the index. The oscillators are displaying a sharp turnaround in the index which implies resistance at higher levels in the short term. For a confirmed bull run, the Nifty should surpass the previous top at 1106 and make a higher bottom and top formation. Till then, the rally will be short term in nature.
Our outlook for the Nifty is that of optimism as the initial part of the week is likely to see buying momentum.
Our outlook for the markets remain positive as advocated in the last fortnight and we suggest buying in small lots and holding on to long positions to let your profits run. Fresh positions should not be aggressive and traders should avoid highly speculative counters. For stock specific recommendations, refer to our special edition - " Flavours of the week."
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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