It was a wild week at the markets and last Thursday shook the markets completely. The SENSEX was down 188 points at the low of the day and then gained 391 points to close the day with gains of 208 points. The intra-day swing was 579 points and the net change 208 points. This wild move pretty much saved the day otherwise we could have given up most of the previous week’s gains. The week saw the BSE SENSEX losing 255.67 points or 1.30 per cent to close at 19,427.56 points. The NIFTY lost 73.10 points or 1.23 per cent to close at 5,872.60 points. The broader market saw the BSE100, BSE200 and BSE500 losing 1.26 per cent, 1.27 per cent and 1.31 per cent respectively. The BSE MIDCAP and BSE SMALLCAP lost 1.56 per cent while the smallcap lost 2.44 per cent.
The BSE FMCG was the gainer up 1.48 per cent. The other gainer was BSE HEALTH up a tad at 0.01 per cent. The losers included BSE CONSUMER down 3.91 per cent, BSE BANKEX down 2.96 per cent and BSEAUTO down 2.30 per cent. In individual stocks, Hindustan Unilever was up 4.52 per cent, Tata Coffee up 4.24 per cent, Jet Airways up 3.71 per cent and State Bank up 2.63 per cent. On the losing side were ICICI Bank down 6.32 per cent, National Aluminum down 10.13 per cent and Bajaj Auto down 7.95 per cent.
The week had plenty of action with the government completing divestment in two companies -- RCF and National Aluminium. The floor price for RCF was Rs 45 and the issue through which Rs 311 crore was raised was bailed out by LIC buying close to 48 per cent. The issue received bids at the floor price and the indicative price was Rs 45.02.
The condition of National Aluminium was worse with the issue receiving bids for about 61 per cent of the offer, including the additional offer at the floor price of Rs 40. Here, again LIC did the rescue act and it would be known today or tomorrow what quantity they subscribed. A total of Rs 628 crore was raised from this sale.
In the coming week, SAIL is likely to be divested. In a span of a little over nine weeks the share price of SAIL has fallen from Rs 101 to just about Rs 69. In the same time, the price of Tata Steel has also fallen from Rs 448 to Rs 355 but the fall in the case of Tata Steel is significantly lower. The IPO from Repco Home Finance was subscribed 1.65 times but with the help of QIBs who subscribed their portion 3.39 times. The HNI and Retail portion remained under subscribed.
The week gone by had plenty of action with inflation coming in higher at 6.84 per cent against 6.62 per cent. IIP data was positive at 2.4 per cent compared to a year ago, and, in the current year for the first 10 months is up 1 per cent against 3.4 per cent in the previous year.
Preliminary data on advance tax shows that of 41 large firms based in Mumbai there is a growth of 5.67 per cent in tax paid in the quarter. Though the numbers look encouraging, but they are certainly not enough to achieve the revised budget estimates for the year 2012-13. FIIs continued to be buyers with net investments of Rs 3,675 crore while domestic institutions sold shares worth Rs 1,415 crore. The Indian rupee gained to close at Rs 54.01 to the US dollar.
The key event to be watched is what RBI governor does tomorrow in the monetary policy review meeting. With CRR being at a near historic low level of 4 per cent, there is no way any further cut can happen here, it remains to be seen what is done with Repo and reverse Repo rates. A cut of 25 basis points looks a certainty and the markets could get a booster dose if for any reason the same is increased to 50 basis points. The most probable thing that would be done is a 25 basis points cut in Repo and Reverse Repo. This would be more or less neutral for the market. A build-up of the markets into Tuesday anticipating RBI action and then a sell off is the most likely scenario in the week, unless the Repo and reverse Repo rates are surprisingly cut by 50 basis points.
Key levels for the SENSEX are 19,200 and 19,650 while similar levels for the NIFTY are 5,780 and 5,975 respectively. The BSE SENSEX has support at 19,316 points, then at 19,153 points, then at 19,026 points and finally at 18,918 points. It has resistance at 19,606 points, then at 19,728 points, then at 19,896 points and finally at 20,035 points. The NSE NIFTY has support at 5,840 points, then at 5,792 points, then at 5,748 points and finally at 5,668 points. It has resistance at 5,925 points, then at 5,964 points, then at 6,009 points and finally at 6,044 points. The key movements would be decided by the action taken by the RBI Governor. A Repo cut of 25 basis points is already built into the current market. For further momentum and movement a 50 basis points Repo cut is required.
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.