After dramatic week, markets looking up

The markets were weak in the initial part, and the mid-week holiday changed sentiments and market movement. Though on Friday the markets closed neutral the Sensex ended with net gains of 188.68 points or 0.96 per cent at 19,915.95 points. The Nifty gained 74.10 points or 1.27 per cent to close at 5,907.30 points. The broader indices like the BSE100, BSE200 and BSE500 gained similar at 1.28 per cent, 1.27 per cent and 1.30 per cent respectively. BSEMIDCAP gained 1.94 per cent while BSESMALLCAP gained 1.25 per cent. The top gainer amongst sectoral indices was BSEREALTY up 4.24 per cent. Other gainers included BSEBANKEX up 2.90 per cent and BSEAUTO up 2.73 per cent. The losers were led by BSEFMCG down 1.83 per cent and BSEPOWER down 1.1 per cent.

Ucertain: The violent reaction to the announcement bifurcating Andhra Pradesh was among the upheavals that the week saw. Pic/AFP

In individual stocks the biggest gainer was RANBAXY up 7.95 per cent. Others included LIC Housing Finance up 7.26 per cent and Bajaj Auto up 6.37 per cent. The last IPO to hit the market, Just Dial hit a 20 per cent upper circuit on Friday and gained a staggering 21.78 per cent for the week. The IPO price was R 530 and the share has almost doubled at Rs 1027.50. The losers were led by Wockhardt Pharma which was down 18.53. Other losers included ONGC and NTPC which were down an identical 3.52 per cent and ITC down 2.52 per cent.

We had plenty of political news during the week. First was the ordinance on tainted MPs and MLAs being permitted to occupy their office saw Rahul Gandhi make a planned attack on the cabinet decision of recommending it and then the cabinet withdrawing it. Former Bihar Chief Minister and leader of the RJD, Lalu Yadav was indicted in the fodder scam and sent to jail. In the process he became the first MP to be unseated under the new law. The Supreme Court advised that voters be given a “NOTA” or “none of the above” choice in the coming state elections. The Election Commission has notified elections in five states which will go to polls between November 11 and December 4. The model code of conduct has been enforced which means there will be no policy decision which could be seen as influencing the voter between now and December 4. The Union cabinet has announced its decision to split the state of Andhra Pradesh into Telangana and Seemandhra. The state is under turmoil and there will be plenty of drama in the state from all political parties.

The HSBC PMI index for services sector fell from 47.6 to 44.6 indicating a slowdown even in the services sector. This is the lowest value since April 2009 indicating and confirming the general weakness in the economy. CAD or current account figures for the first quarter without the gold import were better than expected but one is not sure what would happen in the second and subsequent quarters. The government is planning to cut expenditure but when that would actually happen is unknown. Petrol prices were cut by over Rs 3 per litre but the anticipated large diesel price hike did not happen and will seems unlikely in the near future either.

The US stalemate continues currently but should certainly get resolved before the country slips into default if the issue is not resolved by October 17. Global markets have not been impacted much but there is wide debate that withdrawal of bond buying by the Fed may begin with the resolution of this dispute. Dow Jones lost 1.21 per cent for the week to close at 15,072 points.

FIIs were buyers of equity of Rs 1,100 crore during the week and R 12,633 crore during the month of September while domestic institutions were sellers of Rs 636 crore in the week and Rs 2,800 crore in the month. The rupee was quite stable and less volatile. The rupee gained R 1.06 to close at a seven week high of Rs 61.44.

The week ahead has results from IT major Infosys being declared on Friday. With Narayan Murthy back in the saddle, the street expects a stellar set of results. The rupee depreciation should help the company in profits as well. The same day IIP data for the month of August is to be declared.

The week ahead would be choppy and would be dominated by news from within the country and the stand taken by FIIs. There has been hardly any impact of the US issue on global markets and to expect a big impact on resolution would be out of place. Markets may rally in the second half of the week after being subdued or under pressure initially. Key levels for the Sensex are 19,535 and 20,200 while they are 5,700 and 6,025 for the Nifty. The support for the Sensex is at 19,815 points, then at 19,583 points, then at 19,455points and finally at 19,264 points. It has resistance at 20,034 points, then at 20,197 points, then at 20,327 points and finally at 20,485 points. The Nifty has support at 5,878 points, then at 5,812 points, then at 5,755 points and finally at 5,695 points. It has resistance at 5,943 points, then at 6,008 points, then at 6,066 points and finally at 6,142 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

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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