A weak week

Markets go flat, puncture spirit of investors

The markets were weak almost all through last week in a short and truncated trading session which was on for a mere three days with holidays on Monday and Thursday. Tuesday, the market was virtually flat gaining a mere seven points on the BSE SENSEX while Wednesday and Friday were big losers. The holiday on Thursday in hindsight was a saving grace as European and US markets lost very heavily on that day. The BSE SENSEX lost 369.79 points or 2.11 per cent to close at 17,192.82 points. The NSE NIFTY lost 115.35 points or 2.18 per cent to close at 5,168.85 points. The broader indices like the BSE 100, BSE 200 and BSE500 lost 2.33 per cent, 2.32 per cent and 2.32 per cent. The BSE MIDCAP and BSE SMALLCAP lost 2.16 per cent and 2.78 per cent respectively.

Too big to bail or fail: Rome, ITALY: Former EU commissioner Mario
Monti (c) speaks to the press as he leaves his hotel in Rome. Italy
readied a new government yesterday after the momentous resignation
of Prime Minister Silvio Berlusconi pics/AFP

SBI reported results that were much better than the street expected but the NPA's rose significantly, causing the share to lose Rs 166 or 8.45 per cent to close at Rs 1798. ICICI Bank also lost 7.01 per cent and this brought the BSE BANKEX down 5.44 per cent. The other big losers were the BSE REALTY which lost 5.98 per cent and BSE METAL which lost 4.84 per cent. The other big loser was Tata Steel, which lost 8.1 per cent after posting disappointing results for the September quarter.

In other news, Kingfisher airlines or the King of good times seems to be in serious trouble and has asked the banks to bail it out from its problems and its financial crisis. The share tumbled 16.91 per cent to close at Rs 19.65. SKS Microfinance which had set the markets ablaze when it made its debt in August 2010 at an issue price of Rs 985, made a lifetime high of Rs 1491, closed circuit down at Rs 158, and a mere 10.6 per cent of its historical high now remains, after the company posted losses for the September quarter. It's a simple case of being overhyped by the merchant bankers, the promoters and using names of high profile investors as key investors to trap innocent people in what could be yet another scam amongst the many that are happening in the country.

There have been no IPOs in the last six weeks and nothing that is likely immediately. One does hear that the government is likely to bring some of its issues in the near term and raise resources for its fiscal deficit, which is running out of control. Budgeted expenses on fertiliser subsidy, petro products subsidy and proposed divestment proceeds are likely to fall short of budget proposals by about 2 lakh crores. To aggravate the situation, corporate results have been below expectation and the likely tax collection would fall. This feeling is reflected in the money market where out of the last five auctions four have devolved. These factors make one believe that it is not only the Euro zone crisis, which is affecting the global markets and hence India, but we have any problems of our own.

The Indian rupee closed weak at Rs 50.12 for the week and the IIP (Industrial Index of Production) numbers for the previous month showed that the manufacturing sector has taken a huge beating. This surely puts our GDP growth numbers in doubt as well. Foreign Institutional Investors were net buyers of Rs 932 crore in the week while domestic institutions sold slightly more than that at Rs 1021 crore. The institutional picture continues to remain unclear as one is not sure as to which way institutional activity will continue in the future. The markets have filled the gap, which was first made on the downside on August 5 and on the upside on October 28. The low of the week made on Friday was 17,096. These gaps coming again and again are a sign of nervousness and market volatility. This is not a good sign for the health of the markets and one feels uncomfortable when such things happen.

Coming to this week, we already have a new Prime Minister in Greece and the Italian PM will also be gone by the time one reads this column. These are small steps in the big problem of Europe and if it does anything to help matters, it would certainly be most welcome. But it is unlikely to help the crisis in any significant manner. There is a saying on the street about Italy, "Too big to bail, Too big to fail." This crisis is looming large and looks likely to derail world markets.

The BSE SENSEX has support at 17,100 points, then at 16,973 points, then at 16,917 points, then at 16,752 points and finally at 16,669 points. It has resistance at 17,282 points, then at 17,464 points, then at 17,535, then at 17,658 and finally at 17,813 points. The NSENIFTY has support at 5,141 points, then at 5,084 points, then at 5,101 points and finally at 4,926 points. It has resistance at 5,197 points, then at 5,253 points, then at 5,276 points, then at 5,317 points and finally at 5,360 points. Be patient and do not jump into buying simply because the stock has fallen. More such falls maybe possible, hence be choosy and take your pick one at a time.

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