A loss cause
Mostly dark but there may be some light at the end of the tunnel due to interest rates, which are likely to go up
The last week of the calendar year was one of losses and we lost more than what was gained in the previous week.
The BSE SENSEX lost 283.78 points or 1.8 per cent to close at 15,454.92 points. The NSE NIFTY lost 89.70 points or 1.9 per cent to close at 4,624.30 points.
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The broader indices like the BSE100, BSE200 and BSE500 lost 1.85 per cent, 1.80 per cent and 1.69 per cent respectively. BSE MIDCAP and BSE SMALLCAP lost much less at 0.97 per cent and 1.15 per cent.
The BSE OIL&GAS index lost 5.01 per cent, BSE BANKEX lost 3.95 per cent, BSE REALTY lost 3.64 per cent and BSE METAL lost 2.5 per cent.
BSE gained 1.34 per cent. In individual stocks, Reliance was a big loser with losses of 7.10 per cent. The stock closed at Rs 693, which is a new low.
Axis Bank was down 8.19 per cent, Maruti Udyog down 5.54 per cent and ICICI Bank down 5.12 per cent. Hero Honda was up 2.92 per cent, Infosys was up 2.6 per cent and TCS up 0.43 per cent.
The Indian Rupee weakened marginally and closed at Rs 53.10. Foreign Institutional Investors (FII) sold shares worth Rs 107 crore while domestic institutions bought shares worth Rs 443 crore. The December series, which expired on Thursday, was weak and the markets cracked on Thursday and the same expired at a value of 4,646.25 points, a loss of 110 points for the month.
The SENSEX and NIFTY have closed for the year at levels, which are just about 2 per cent higher than the lows of the year. These lows were made on December 20 at 15,135.86 for the SENSEX and 4,531.15 on the NIFTY.
The closing levels and the current market position indicate that the lows are likely to be broken and one should not get surprised if the same happens as early as the first or second week of January itself. The danger once that happens is the physiological 15K mark on the SENSEX would get broken.
There was a very interesting order on seven IPOs involving the promoters, merchant bankers and some related parties issued by SEBI. These seven companies were Bharatiya Global Infomedia Limited, Brooks Laboratories Ltd, Onelife capital Advisors Ltd, P G Electroplast Ltd, RDB Rasayans Ltd, Taksheel Solutions Ltd and Tijaria Polypipes Ltd.
The order is indeed commendable as the regulator has gone deep into the issues and after detailed investigation announced the interim orders. He has asked the companies to deposit proceeds into escrow account pending further direction.
It is widely believed that post this order the face of IPO's now entering the capital market would change and the pre-selling of issues as existed would cease to happen. This is not the last word on these companies and some more companies are likely to be included in the current list.
The government on Friday announced a decision to borrow more money from the bond markets and the interest rates are likely to go up on Monday. There are two interesting tax-free bond issues currently open for retail investors, which offer 8.2 per cent for 10 years and 8.3 per cent for 15 years.
These issues are from NHAI (National Highways Authority of India) and PFC. The issue for other categories like QIBs, HNIs and NRIs is oversubscribed and only those people wishing to apply in the retail category upto Rs 5 lakh may still do so.
These instruments have an annual interest payment and would be traded on the two stock exchanges after allotment and listing. Considering the coupon rate of 8.2 per cent and 8.3 per cent and the feeling that interest rates are peaking, this is a good rate to lock in returns for 10 and 15 years.
This week will be volatile and every effort would be to see that the first week of the New Year closes in positive territory. The mood is down and there is no optimism around.
Global cues will be keenly watched. The BSE SENSEX has support at 15,343 points, then at 15,224 points, then at 15,135 points, then at 15,056 points and finally at 14,876 points. It has resistance at 15,630 points, then at 15,867 points, then at 15,917 points, then at 16,049 points and finally at 16,234 points.
The NSENIFTY has support at 4,591 points, then at 4,555 points, then at 45,10 points and finally at 4,363 points. It has resistance at 4,673 points, then at 4,716 points, then at 4,755 points and finally at 4,844 points.
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
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