Critical time for investors

Infosys brought down the Sensex, post its results as the stock lost ground by about 125 points last week

The last week was terrible and we are back from where we started at the end of March 2015. The Sensex lost a whopping 1004.16 points or 3.53 per cent to close at 24,437.94 points, while The Nifty lost 300.75 points or 3.49 per cent to close at 8,305.25 points.

With the monsoon said to be below average, things are not loooking too good. Pic/Bipin Kokate
With the monsoon said to be below average, things are not loooking too good. Pic/Bipin Kokate

The broader markets saw BSE100, BSE200 and BSE500 lose 3.53 per cent, 3.67 per cent and 3.79 per cent. BSEMIDCAP lost 3.12 per cent whilst BSESMALLCAP lost the most at 5.28 per cent. So great was the intensity of the fall that not a single sectoral index was able to register gains.

The top losers were led by BSEREALTY down 7.69 per cent followed by BSEIT 5.76 per cent, BSETECH 5.23 per cent and BSEHEALTHCARE 4.87 per cent. In individual stocks, Tata Steel was the top gainer up 7.03 per cent followed by Yes Bank 1.72 per cent and TCS 0.84 per cent.

The losers were led by DLF down 10.87 per cent, followed by Wipro 10.82 per cent, Infosys 8.52 per cent and Hind Unilever 5.02 per cent.

Slip and slide
Once again, Infosys brought down the markets post its results, and though the time of the results was changed from early morning before market to mid-afternoon at 2.20 pm the end result was the same. The stock lost ground and brought down an already weak Sensex with the fall in Infosys alone bringing down the Sensex by about 125 points in the last week.

Dow Jones closed the last week at 18,080.14 points, a gain of 253.84 points or 1.42 per cent. The Indian rupee lost R 1.20 or 1.92 per cent to close at 63.56. FII’s were big buyers of R 13,222 crores for the week primarily on account of the deal in Sun Pharma where Daiichi sold its residual stake in Sun Pharma post-merger with Ranbaxy.

If one were to exclude the value of the deal FII's were net sellers for the week and neutral for the month of April so far. Domestic institutions were buyers of Rs 4,247 crores.

This week sees futures expiry for April happening on Thursday, April 30 which also happens to be the last day of the trading week with May 1 being a holiday on account of Maharashtra Day and International Labour Day. While banks will be closed on Monday May 4, markets would remain open.

In primary market news, issue from MEP Infrastructure Developers was just about subscribed. In the week ahead there is an offer for sale from UFO Moviez India Ltd which plans to raise for selling shareholders R 600 crores in a price band of Rs 615-625. The company is all about digital delivery of movies.

When it comes to deciding about application for the primary market where everyone is interested in a ‘first day first show' exit there is no point in looking at the merits or demerits of the company. It makes better sense for retail investors to apply for the minimum lot because in any decent issue they would get allotment only on that basis and that too by lottery. Then, they must look at the company from investment perspective post listing.

Demand stress
The reasons being attributed to the market fall have been demands made on FIIs and FPIs about Minimum Alternate Tax (MAT). There seems to be complete confusion about the same and markets have risen sharply in the first fortnight of April and fallen equally sharply in the second fortnight of the month.

Call it coincidence we were at the high of the month on April 15 when the Sensex made a high of 29,094.61 points and Nifty 8,844.80 points. The rise and the fall combined are a stupendous 3,100 points on the Sensex and 1,100 points on the Nifty.

Coming to April futures expiry, March expired at 8,342.15 points which is a mere 36.90 points or 0.44 per cent higher than current Nifty. Minus the volatility we are where it was or where the month started. The markets are at critical support levels and there would be some sort of short term bounce from these levels.

One needs to be careful and play his cards well as investing ahead of time is frustrating and seeing one’s portfolio depreciate is disheartening. The markets are critically poised and with some concerns raised about the monsoon and a jittery FIIs there could be some selling pressure. Adding some positions on weakness maybe a good strategy for those who are patient.

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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