Coming a full circle

There was a bloodbath, consolidation and resurrection at Dalal Street last week

The markets were wild last week and the recovery that one saw on Friday could at best be described as a rebirth. Wednesday was a bloodbath that left the markets badly bruised and virtually no place for the bulls to hide. Thursday was a day of consolidation where the markets lost further ground but were in a better mood while Friday was the day of resurrection for the bulls. They now have hope to live and fight another week.

ACTION ZONE: Dalal Street was the focus as the markets saw a fall and then recovered, last week. PIC/ BIPIN KOKATE
ACTION ZONE: Dalal Street was the focus as the markets saw a fall and then recovered, last week. Pic/ Bipin Kokate

Sensex gained 94.08 points or 0.35 per cent to close at 27,011.31 points while Nifty gained 10 points or 0.12 per cent to close at 8,191.50 points. The lows made on Wednesday were 26,473.99 points on the Sensex and 7,997.15 on the Nifty. Broader markets saw BSE100, BSE200 and BSE500 losing 0.15 per cent, 0.28 per cent and 0.32 per cent respectively. BSEMIDCAP lost 1.73 per cent whilst BSESMALLCAP lost 1.05 per cent.

Sectoral gains
The top sectoral gainers were led by BSEFMCG up 1.88 per cent followed by BSEIT 1.62 per cent and BSEMETAL 1.55 per cent. The losers were led by BSECONDUR down 4.02 per cent followed by BSEBANKEX 3.05 per cent and BSEPOWER 3.02 per cent. In individual stocks, the gainers were led by Bajaj Auto up 9.23 per cent followed by Hindalco 7.71 per cent, Hind Unilever 5.29 per cent and HCL Tech 5.23 per cent. The losers were led by Bank of Baroda down 14.09 per cent, Canara Bank 9.06 per cent, Punjab National Bank 8.77 per cent and Titan Industries 7.63 per cent.

BENGAL BOUND: Narendra Modi (l) is escorted by West Bengal Governor Keshari Nath Tripathi at the airport during his two-day official trip to the state. PICS/AFP
BENGAL BOUND: Narendra Modi (l) is escorted by West Bengal Governor Keshari Nath Tripathi at the airport during his two-day official trip to the state. PICS/AFP

The week was extremely volatile with three of the five trading days showing movement in excess of 2 per cent of the benchmark indices. It was only Tuesday and Thursday which were relatively quiet considering the rest of the week.
FII’s were sellers during the week of Rs 3,950 crores while domestic institutions were buyers of Rs 1,670 crores. The concerns of FII’s over applicability of MAT and the dispute thereon was partially addressed with the government setting up an expert panel to expeditiously look into the matter and address the issues at hand. This gave some respite to the relentless selling witnessed in the markets and also helped the rupee gain some ground. The Indian rupee lost 50 paisa or 0.92 per cent to close at Rs 63.92. Dow Jones closed at 18,193.25 points a weekly gain of 169.15 points or 0.94 per cent.

There is an IPO currently on from PNC Infratech limited which closes on Tuesday, May 12. The company through a largely fresh issue and a small offer for sale would be raising Rs 458-488 crores in a price band of R 355-378. The company has allotted to 9 anchor investors comprising 24 entities shares worth Rs 146 crores. The company is into EPC (Engineering Procurement and Construction) of road projects and has also begun doing BOT (Build Operate and Transfer) projects. The issue looks interesting but currently there seems to be a low key about the issue.

Subscription figures
The pounding that markets got during the last week could be partially the reason. I suggest looking at subscription figures on Tuesday morning and if the issue in the QIB and HNI sections have received good response, then to apply for the same. The business is good and with the government making road and infrastructure development a key focus area all developers have their plates full in terms of orders on hand.

Shares of UFO Moviez are expected to list on Friday, May 15. The issue was oversubscribed but had apparently lost steam going into the final day of subscription.

The landmark GST bill has been passed in Lok Sabha where the government has a comfortable majority. The same is to be taken up for discussion and voting in the Rajya Sabha probably today where the government has to cobble up or mange a majority. The two day visit to West Bengal and launching of three national schemes from there was probably an exercise to bring TMC on board. Incidentally in the earlier coal block auction this state was the largest beneficiary. Besides the GST bill some more bills are slated with Lok Sabha also extended upto May 13.

The week ahead will also see some data being released on inflation and it would be important to see how the effect of the monsoon is panning out.

This week has a positive bias seeing the technical position of the market which had become oversold during Wednesday's sharp fall. A further pullback is on the cards and if the GST bill becomes a reality with Rajya Sabha clearing the same, we could see bears running for cover.

Results are by and large on expected lines and are as a whole slightly below the broadly expected numbers leading to the correction which one saw. With the government acting on the MAT issue and actual work happening with GST likely to become a reality, a rally is certainly on the cards. Ride the rally but be cautious as the current tussle between bulls and bears does not end here. We need the monsoon to bring relief to the heat and also to the markets. Ride the rally.

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.

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