Put-call ratio cooling off

Technicals

 The market breadth was negative by a wide margin and the traded volumes on the exchanges were marginally higher than the 10 day moving average.

 This is a sign of caution as I have been mentioning in the recent past - volumes on downtick days tend to be higher.

 As I had also forecast previously, the 1315 - 1320 & 4127 - 4145 levels on the NSE & BSE respectively were immediate resistance areas. It maybe noted that these were the levels where the markets had melted down after the stock scam of 2001.

 The Nifty needs to convincingly surpass the 1320 levels with convincing volumes and a highly positive market breadth that too on a sustainable closing basis. The commensurate levels on the Sensex will be around 4150.

 The markets have been lacking conviction at higher levels as can be seen from the offloading that witnessed in some of the leading counters in the F&O segment.

 While a part of that unloading of bull positions can be attributed to the impending expiry of the August series, the put-call ratio (which gives a more sober understanding ) is cooling off to 0.48:1.

 On the downside, expect support on the Nifty at the 1234 levels and the Sensex at the 3970 levels. Among stocks, BPCL has broken out of the resistance zone and is headed for higher levels.

 The crucial level to watch is Rs 312 above which, this counter is very bullish. Should the scrip stay above this level, expect a further appreciation up to 4 - 5 per cent in the near future.

 Buy in the cash and derivatives segments especially in the September 2003 series. Reliance has been advocated by me as capable of leading the rally from the front and it has proved its mettle today.

 The counter has surpassed the Rs 378 inflection point and is headed for the Rs 400 mark in a conducive market. Buy in the cash and derivatives segment especially in the September 2003 series.

 Vijay Bhambwani

 CEO, BSPLindia.com

 The author is a Mumbai-based investment consultant and invites feedback at vijay@bsplindia.com

 Sebi disclosure: The author has no exposure in any securities mentioned above.