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A 'close' save

Last week gone by, was extremely choppy and volatile, so much so that at the end of four days of trading the markets were virtually flat. It’s the Friday rally which saw markets close positive. The BSESENSEX gained 100.01 points or 0.52 per cent to close at 19,495.52 points. The NIFTY gained 25.70 points or 0.44 per cent to close at 5,867.90 points.


Trading hurt: A choppy and volatile week saw markets virtually flat. Pic/Atul Kamble

The broader indices fared better with the BSE100, BSE200 and BSE500 gaining 0.63 per cent, 0.6 per cent and 0.63 per cent respectively. The BSEMIDCAP gained 0.46 per cent while the BSESMALLCAP gained 0.86 per cent. The top gainer in sectoral indices was BSEFMCG which gained 6.01 per cent. Other gainers included BSEHEALTH at 2.69 per cent and BSEAUTO 0.96 per cent.

The losers included BSEPSU down 2.2 per cent, BSEBANKEX down 1.66 per cent and BSEMETAL down 1.37 per cent. In individual stocks Ranbaxy was a big gainer up 10.28 per cent. Others included Lupin up 7.05 per cent and Tata Motors up 5.24 per cent. The losers included Gitanjali Gems down 22.56 per cent, MMTC down 22.46 per cent and LIC Housing down 8.52 per cent.

Shares
There was plenty of news flow during the week starting with the open offer from Hindustan Unilever which closed on Thursday. The company was able to receive shares for roughly 65 per cent of the shares required, to increase the parent shareholding to a maximum of 75 per cent. This saw a short squeeze in the share as it was expected that people would more than willingly tender shares. On Friday the scrip made a lifetime high of Rs 632 and closed at Rs 609.15, up 4.12 per cent for the week. Deepak Fertilisers has acquired a 24.46 per cent stake in beleaguered Vijay Mallya’s company Mangalore Chemicals at Rs 61.75 per share. The share after hitting a high of Rs 66.16 closed at Rs 54.10 up 8.85 per cent.

Loss
Gitanjali Gems has been in the news for the wrong reasons and its share is at the receiving end. It continued to be locked circuit down for all the five trading sessions of the week and has now lost from Rs 575 to Rs 183 in the last one month. Similar is the case of the PSU MMTC which saw its divestment at a floor price of Rs 60. The share has been locked down at circuit from the day of the divestment and has fallen from Rs 211.45 to Rs 79.45. By the end of the week considering its daily maximum permissible loss of 5 per cent, the share would be close to its floor price at the time of divestment.

Decline
The rupee continued to weaken and lost Rs 0.83 or 1.4 per cent to close at Rs 60.22. FII’s having slowed down the sales and were net sellers of a mere Rs 186.70 crore in equities but continued to sell debt worth Rs 4,258.90 crore. Domestic institutions were sellers of equities worth Rs 344.43 crore.

Bill
The President promulgated an ordinance for the Food Security Bill on Friday. While provisions of Rs 90,000 crore have been made in the budget for the same, the cost as per government estimates has increased to Rs 1, 25,000 crore which means a further hit of R 35,000 crore to the fiscal deficit, something which our country can ill afford. The ordinance needs to be passed as a bill by both houses of parliament within six weeks of its first sitting in the next session failing which it would lapse. The timing of the ordinance gives one to believe that the general elections scheduled for April 2014 are likely to be advanced to the winter of 2013 along with state elections in four states.

Prices
Oil prices have risen sharply and are up over 9 per cent in just under a month. They have crossed the $103 mark and are at their highest level in a year, on fears that the tension in Egypt may spread to other countries in the region. To make matters worse for India, the US economy is recovering and data in the US on Friday showed that the jobless claims are lower than expected. This makes the “quantitative easing” a reality and it may happen as early as the fourth quarter of the 2013 financial year. These two factors put together, would be extremely dangerous and negative for the highly vulnerable, and it is expected that funds would continue to be pulled out from emerging economies.

Ahead
The week ahead is expected to be volatile and the rupee highly vulnerable. Any depreciation of the rupee would hurt our markets as well and I believe the week ahead would see a negative bias. Key levels for the SENSEX are 19,100 and 19,725 while they are 5,745 and 5,975 for the NIFTY. The support for the SENSEX is at 19,435, then at 19,255 points, then at 19,060 points, then at 18,925 and finally at 18,722 points. It has resistance at 19,598 points, then at 19,745 points, then at 19,897 points, then at 20,051 points and finally 20,235 points. The NIFTY has support at 5,845 points, then at 5,795 points, then at 5,790 points, then at 5,699 and finally at 5,640 points. It has resistance at 5,892 points, then at 5,929 points, then at 5,965 points, then at 6,022 points and finally at 6,071 points. Trade cautiously, with a negative bias.

Arun Kejriwal is founder of the Mumbai-based advisory firm Kejriwal Research & Investment Services Pvt Ltd. Readers are invited to read more about these and other issues on his website http://ak57.in

Disclaimer: No financial information whatsoever published anywhere in this newspaper should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is for educational and information purposes only and under no circumstances should be used for actual trading or making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment or trading decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at his or her risk.  

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