All eyes on polls

The market will respond to alliances and opinion polls as they unfold, with the elections due to be notified this week

The week gone by behaved as predicted and expected and gained on all the four trading days. The expiry on Wednesday of February futures passed off peacefully. The Sensex gained 419.37 points or 2.03 per cent to close at 21,120.12 points.

Election frenzy has begun to grip the nation, and the markets are bound to follow
Election frenzy has begun to grip the nation, and the markets are bound to follow

The Nifty gained 121.50 points or 1.97 per cent at 6,276.95 points. The BSE100, BSE200 and BSE500 gained 1.80 per cent, 1.81 per cent and 1.73 per cent respectively. The BSEMIDCAP gained 1.22 per cent while the BSESMALLCAP gained 0.81 per cent.

The top sectoral gainer was BSECAP GOODS up 5.31 per cent followed by BSEHEALTHCARE up 4.54 per cent and BSEAUTO up 3.54 per cent. The losers were led by BSEMETAL down 3.44 per cent. The other loser was BSEPOWER down 1.25 per cent.

In individual stocks the biggest gainer was BHEL up 11.10 per cent followed by ONGC up 8.83 per cent and Hindalco up 7.52 per cent. The losers were led by NTPC after several brokerage houses downgraded the stock post the CERC guidelines and it was down 14.79 per cent.

Other losers included Tata Steel down 7.98 per cent and Maruti Suzuki down 5.31 per cent. FIIs were buyers of equities of R 1,930.32 crore for the week while domestic institutions were sellers of equities worth Rs 607.31 crore. The Indian rupee gained Rs 0.37 to close at Rs 61.75.

The markets will respond to alliances and opinion polls as they unfold. The Election Commission is to notify the polls any time this week and also announce the election schedule. There is a last-ditch effort to introduce some ordinances before this notification to prove the seriousness of the outgoing government in curbing corruption. How many of them see the light of the day and are cleared by the President, is to be seen.

The government is to divest 10 per cent of IOC to ONGC and OIL at a discount of 10 per cent to the market price as the stock price of IOC has run up in the last month. The government is expected to raise about
Rs 5400-5500 crore from this divestment.

The government has raised large amount form PSU companies from special or interim dividends which have been much more than the norm. While it may seem an act of desperation, minority shareholders are not complaining. Share prices of Coal India have returned to the IPO price of November 2010. Shares were issued at Rs 245 and made a high of Rs 422 in May 2011 and have been on a general decline thereafter.

GDP for the quarter October-December 2013 was at 4.7 per cent, up against 4.3 per cent in the previous year but down from 4.8 per cent in the July September quarter. The government’s estimate of 4.9 per cent for the year 13-14 looks overstretched with this result.

I believe economic data is likely to lose relevance as there would be no improvement in data over the next few months. Only once there is a new elected government in place which sets about its task of restoring a semblance of order will things start taking shape. Till then it is more about expectation and hope.

The markets are likely to take cues on the election results once the polls are notified anytime during the week. The actual elections could last over 4 weeks and mid-April to mid-May should see elections in 6-7 phases.
Key levels for the Sensex are 20,625 and 21,325 while they are 6,125 and 6,345 for the Nifty.

The support for the Sensex is at 21,026 points, then at 20,875 points, then at 20,791 points, than at 20,545 points and finally at 20,343 points. It has resistance at 21,117 points, then at 21,294 points, then at 21,328 points, then at 21,483 points and finally at 21,625 points.

The Nifty has support at 6,242 points, then at 6,187 points, then at 6,106 points, then at 6,079 points and finally at 6,025 points. It has resistance at 6,297 points, then at 6,329 points, then at 6,364 points, then at 6,415 points and finally at 6,481 points. Enjoy a gradual rise in indices as we see the all-time high being attempted to be crossed this week again.

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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