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Drama at Dalal Street

Sharp, short, swift and brutal. That seems to be the sentiment as things look tired and wired for now, at least

The week gone by was dramatic and had all the action one could imagine and some more. The first two days had the desired correction followed by a rally led by short covering and then a flat day which saw the markets ending flat for the week. The BSESENSEX gained 29.38 points or 0.11 per cent to close at 27,090.42 points while the Nifty gained 15.95 points or 0.20 per cent to close at 8,121.45 points.

Just like this gulmohar tree in front of BSE, the markets also saw a colourful week gone past. Pic/Datta Kumbhar
Just like this gulmohar tree in front of BSE, the markets also saw a colourful week gone past. Pic/Datta Kumbhar

Losing ground
The broader markets saw the BSE100, BSE200 and BSE500 all lose ground down 0.21 per cent, 0.30 per cent and 0.27 per cent respectively. The BSEMIDCAP lost 1.18 per cent while the BSESMALLCAP gained 0.22 per cent.

In sectoral gainers, there were just three with the top gainer being BSEIT 2.26 per cent, followed by BSEHEALTHCARE 1.41 per cent and BSEAUTO 0.92 per cent. The losers were led by BSEOIL&GAS down 3.05 per cent, followed by BSEMETAL 3.00 per cent and BSEPSU 2.88 per cent.

In individual stocks, the top gainer was Dr Reddy up 8.68 per cent followed by HeroMoto 7.04 per cent and TCS 3.92 per cent. The losers were led by Jindal Steel down 10.65 per cent, Yes Bank 7.99 per cent, IOC 7.18 per cent and SAIL down 6.16 per cent.

The September series futures expire on Thursday, September 25 and the previous expiry was at a level of 7,954.35 points which is lower than the current level of 8,121.45 points by 167.1 points or 2.1 per cent. While this does give the bulls an upper hand, it is not in the comfort zone as the market has turned extremely volatile.

In international news, Dow Jones rose to make yet another lifetime high and closed at 17,279.74 points a gain of 292.59 points or 1.72 per cent. The FED in its review has decided to raise rates in a phased manner going forward but the same may take anywhere from 6 to 9 months to begin. It’s more of a cautionary signal than anything else.

Shares of Alibaba, the Chinese e-commerce company listed on the New York Stock Exchange on Friday created history when they raised the highest amount of money at $ 21.8 billion. The IPO was priced at $ 68 and closed with gains of 38 per cent at $ 93.89. The market cap of the company at this price is a staggering $ 232 billion.

Interesting data
Coming to the previous week, the daily performance makes very interesting data Down 245 on Monday, down 324 on Tuesday, up 139 on Wednesday, up 481 on Thursday and down 22 on Friday. Total effect markets up 620 and down 591 leaving a net positive of a mere 29 points.

The correction over the first two days has broken the momentum and but for IT sector and some pharma front line companies, the market has begun correcting. FIIs were small buyers or virtually neutral in the market with net purchases of a mere Rs 74 crores while domestic institutions were buyers of Rs 1,300 crores.

In India, the IPO of Shemaroo Entertainment was oversubscribed 7.39 times. Shares of Sharda Cropchem which had issued shares earlier and was oversubscribed 60 times would list on Tuesday. Shares were issued at Rs 156 and the grey market premium currently quoted indicates that the share would list around Rs 240-250 when it makes its debut.

The markets are certainly looking tired and though PM Narendra Modi leaves over the coming weekend for his US trip, the expectations from the same seem to have been discounted in advance. People are expecting that with the Japan and China meetings under his belt with an Australian one thrown in between, the US will be a big deal with not only aid but many far reaching agreements including defence.

Coming up
Whilst everything maybe already factored into the price currently, the only unknown factor may be some individual stocks which could be big beneficiaries of specific agreements particularly in defence. Whilst I would not like to name stocks one particular PSU stock could catch your fancy Bharat Electronics and this could become a darling if some positive developments do occur.

The week ahead would be extremely volatile with the September expiry being a key. As mentioned earlier, markets are looking tired and need to consolidate before the next leg upwards. The US visit and its outcome have largely been discounted so getting good news may be difficult. Brace yourselves for a violent and volatile week where movement could be swift and brutal. Trade cautiously but use sharp dips to re-enter the market which have a long way to go.

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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