Create a square by pressing shift while using rectangular shape tool.



Double click the layer to open layer style window. Apply layer style with the settings shown.



After applying stroke reduce the fill value of the square layer to zero in layer palette.





Duplicate square layer three times and place as shown.



Insert a cutout of watch.



Change the layer mode to pin light.



Reduce opacity to 20%.



Move this layer below all the layers in layer order in layer palette.