The Professional Ticker Reader TM

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Sept 27, 2003

Markets recover. Sensex gains 165 points.

Confidence returns, positive breadth as supports hold.

Weekly statistics

The combined value of  shares advancing on the BSE & NSE was Rs. 20178 crores and the value of shares declining was Rs. 10579 crores. This indicates a broader buying bias. The total traded volume on the BSE was Rs. 8939 Crores. The total traded volume on the NSE  was Rs. 21844 Crores.

The week saw a rebound in the sentiments as value buying coupled with short covering lifted stock values. The expiry of the September series of derivatives did not impact the undertone significantly as the short term supports held firmly. The disinvestment blues were put behind as oil stocks rebounded and technology shares led the markets from the front. FII inflows continued unabated and domestic funds sold ahead of Q2 NAV declaration. The Sensex  was boosted by ACC, Bajaj Auto, BHEL, BSES, Castrol, Cipla, Colgate, Grasim, Gujarat Ambuja Cements, HCL Tech, HDFC Ltd, Hero Honda, Hind Lever, HPCL, Hindalco, ICICI Bank, Infosys, ITC Ltd, L&T, MTNL, Nestle, Reliance, Satyam Computers, SBI, Telco, Tisco and Zee Telefilms. The Sensex  was dragged down by Dr. Reddy and Ranbaxy. The rupee ended the week at 45.85 ( + 00.08 ) levels against  the US $.

Note - The put call ratio is at 0.19 : 1.

The markets are looking forward to the earnings season which is the single largest trigger in the immediate future. The upcoming sitting of the cabinet committee for disinvestment will also play a crucial role in determining the sentiments in the near term. FII investments continue to be positive whereas the domestic institutions continue to press sales ahead of the Q2 closing. Since short covering was seen towards the end of the derivatives series for September 2003, a significant drop in values is unlikely. However, it must also be noted that the overseas markets have turned distinctly weak as the US investors have started worrying about the Q3 earnings season ahead. There were also worries about a sustainable recovery in the US economy due to the expected rise in crude prices after OPEC announced a production cut. Keeping these factors in mind, a runaway rally should not be expected either. Watch the crude, gold, US $ and FII investment figures in the coming week for guidance. An analysis of the put call ratio suggests that the sentiment remains highly optimistic, though the outstandings have shrunk significantly in value terms. This does not give a complete picture at this juncture. Therefore, we suggest a cautious approach this week. The larger picture remains positive this far.

The weekly bar chart of the Nifty shows a rebound from the 1300 levels which is a crucial short term support for the index. Our investors will recollect that we had clearly advocated the 1300 levels on the Nifty as a very crucial support last week ( click here to see previous weeks files ),. That hypothesis has been proved correct by the markets. It is important that the index holds this base level for now. It is likely that the markets may consolidate at the current levels before making a secular move upwards. For a clear breakout, it is necessary that the Nifty clear the previous top of 1431 with decisive volumes, positive market breadth and a broader based participation. On the lower side, expect support at the 1365, 1337 and finally at the 1300 levels.

Our outlook on the Nifty is that of a consolidation phase in the coming week.

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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