Bulls vs bears battle

Mixed trend in the market

The week gone by was as predicted and the markets first fell and then the trend changed with the holiday.

Whether this would be the victory of the bulls over the bears or not, one cannot say but the fight will continue. The BSE SENSEX lost 221.22 points or 1.34 per cent to close at 16,232.54 points. The NSE NIFTY lost 55.20 points or 1.12 per cent to close at 4888.05 points. The BSE100, BSE200 and BSE500 lost 1.44 per cent, 1.55 per cent and 1.63 per cent. The broader BSE MIDDCAP and BSE SMALLCAP lost significantly higher at 2.78 per cent and 2.32 per cent. One must recall the intensity of the rally on Friday, which saw the BSE SENSEX gain a staggering 440 points and the NIFTY 137 points. Had this rally not happened, this would have been a bad week for the market? 

Illustration: Jishu Dev Malakar

Moody's downgraded SBI and this caused the stock to fall sharply. They subsequently reaffirmed the ratings of ICICI Bank, which saw some recovery in prices. Banks across Europe have been downgraded and so has Italy. This clearly shows that the crisis of Europe is far from over and one is not even sure as to what would happen in Greece.

The big loser was the BSE BANKEX, which lost 502.89 points or 4.63 per cent to close at 10,347.84 points. The big loser within were the heavyweights SBI which lost Rs 159 or 8.32 per cent to close at Rs 1752 while ICICI lost Rs 51or 5.83 per cent to close at Rs 824. PFC and REC lost 7.30 per cent and 7.34 per cent respectively on concerns that their borrowings in foreign currency could become expensive with downgrades. Sun TV was a big gainer with gains of 12.60 per cent.

The Indian rupee appreciated marginally and closed at Rs 49.16. Foreign Institutional Investors were big sellers last week, with net sales of Rs 2,300 crores for the week. They actually reversed with the market on Friday and bought Rs 500 crores. Domestic institutions were buyers of Rs 1,200 crores. The week saw six IPOs closing their issues and they all managed to get subscribed. The deadline to open the issues before six month old audited results ending March 2011, was the criteria to be met and hence this bunching of issues. The quality of these issues clearly leaves a lot to be desired and one hopes the regulator is keeping tabs on not only the issues but post listing their performance as well. 

Two IPOs were listed during the week with RDB Rasayan Limited crashing 66 per cent on the listing day. The share, which was issued at Rs 79 closed at Rs 26.50. The other listing was Prakash Constrowell Limited, which issued shares at Rs 138. The issue had poor fundamentals and was overpriced, as is the norm these days. The issue rose spectacularly on listing day and closed with gains of 66 per cent. In the next two days, selling pressure saw these gains being knocked off and the share closed the week at Rs 168.35 a gain of 21.99 per cent.  There are no IPOs in the current week. 

The markets in the week, beginning Monday, October 10 are likely to behave in the reverse manner of the previous week. The markets are likely to gain in the beginning and then become negative and in all likelihood close in negative territory for the week. The technical charts indicate that weakness is slowly but surely creeping in and a lot needs to happen before they become even neutral. The BSE SENSEX made a new low during the last week at 15,745.43 points while the NSE NIFTY came tantalisingly close to the low registering 4728.30 against the August 26 low of 4,720. This low coming so soon is too close for comfort, particularly when we had tested these levels on September 26 as well.  The reporting season for Quarter 2 results has begun and the first big result would be on Wednesday, October 12 from Infosys. The market would be expecting the company to increase its rupee guidance in view of the depreciating rupee. The result could be a trendsetter for the IT sector in specific and the markets in general. Traders are advised to use rallies to exit long positions and to build on shorts around the 4975-5050 levels.

The BSE SENSEX has support at 16,138 points, then at 15,940 points, then at 15,869 points, then at 15,745 points and finally at 15,565 points. It has resistance at 16,337 points, then at 16,471 points, then at 16,555 points and finally at 16,756 points. The NSE NIFTY has support at 4,858 points, then at 4,797 points, then at 4,770 points, then at 4,720 points and finally at 4,685 points. It has resistance at 4,920 points, then at 4,964 points, then at 4,981 points, then at 5,034 points and finally at 5,083 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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