Rule#1 - get the code working first, then look at optimising.

Looking at your code - there is no evidence of a ring buffer - where are the head and tail pointers? With a circular (ring) buffer, you don't need flags - you compare the head and tail pointers to see if the buffer is empty,has data avail or full.

Assign symbolic names to ram and bits - makes your code easier to read.

What is the problem in utilising internal ram? Use R0 or R1 instead of DPTR.

push PSW
push ACC
push bank0_R0
mov r0,head_ptr
mov a,SBUF
clr RI
mov @r0,a
inc r0
;
; add in test for end of buffer
;
mov head_ptr,r0
pop bank0_R0
pop ACC
pop PSW
reti