Weekly market view
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Oct 18, 2003 |
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The BSE & NSE combined weekly value of shares advancing was Rs. 27,671 crores and the value of shares declining was Rs. 13,419 crores. This indicates a marginal selling bias. The total traded volume on the BSE was Rs. 12,814 Crores. The total traded volume on the NSE was Rs. 28,333 Crores.
The week saw a landmark trading pattern as the markets braced up for a bullish Diwali. The traded volumes hit a new high and the sentiments turned distinctly bullish as the follow up buying support took values higher. The software sector participated in the upmove after initial hiccups and the old economy stocks lent good support through the week. The traded volumes hit a new peak and the market breadth was marginally negative as the small cap stocks witnessed selling pressure on profit taking. The Sensex was boosted by ACC, Bajaj Auto, BHEL, Cipla, Dr. Reddy, Grasim, HCL Tech, HDFC, Hero Honda, Hind Lever, HPCL, Hindalco, Infosys, L&T, Ranbaxy, Reliance, Satyam Computers, SBI, Telco, Tisco and Zee Telefilms. The Sensex was dragged down by BSES, Castrol, Colgate, Glaxo, Gujarat Ambuja Cements, ICICI Bank and MTNL. The rupee ended the week at 45.34 (+ 00.04 ) levels against the US $. Overall, the week was exactly in line with our forecast ( Click here to view our previous reports)
The markets are still in a bullish groove and results will play a large part in the trend determination of the benchmark indices. The numbers announced so far have been positive and have lent a feel good factor to the sentiments. The markets have risen with higher volumes, however, the signs of caution can be seen in the breadth which has been negative and the outstanding long positions which are diminishing on the upsides. This shows a selling by smart money, also, the impeding expiry of the October series is also likely to see a paring of long positions. I had pointed out on friday that the Nifty was seeing a higher open interest on the short side as compared to the longs for the first time in the recent rally. This shows a hedging by bulls by shorting the Nifty against long positions in individual stocks. Sectoral activity is likely to be polarised around the software, automobiles, steel, banks and cement stocks. Select pharmaceuticals and PSU stocks will bring up the rally from the rear. The international markets are showing a steady trend as the US indices show a consolidation at the current levels. The movement in the coming 4-6 weeks will be crucial as it will determine the pre-christmas spending patterns of the consumer. Overall, we expect our expectations of a bullish Diwali being fulfilled this week.
The weekly bar chart of the Nifty shows a continued rising tops and bottoms formation for the fourth consecutive week in a row. That is a sign of underlying strength. However, the rally is appearing overstretched and therefore caution is advocated. The accompanying breadth has been marginally negative and the oscillators are showing signs of being overbought. That indicates a need for exercising caution. The Nifty has the steam to take it past the 1600 levels and possibly upto the 1620 levels. The support on the downside exists at the 1500 levels. It is important that this level not be violated in the coming week. On the upside, expect resistance at the 1588 and then at 1618 levels.
Our outlook on the Nifty is that of bullishness. Exercise restraint on traded volumes above the 1588 mark.
Trade with a focused approach - fewer shares and in smaller quantities. Stick to stop- losses and and await a decisive move in the indices with convincing volumes for a fresh view. Standby for fresh recommendations via SMS on a real - time basis. For stock specific recommendations, please refer to our special edition "Flavours of the week." Your feedback is important ! Please click here to let us know your views. Click here to inform a friend about this page on our website.
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.
Legal notice :- The Professional Ticker Reader is a trademark of Bhambwani Securities (P) Ltd. and any unauthorised replication / duplication in part or full will be infringing our trademark and will result in legal action being enforced on the infringing persons / parties. |
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Your feedback is important ! Please click here to let us know your views. Click here to inform a friend about this page on our website.