The week ahead would be driven by events connected with Greece. Global markets will also keep a close watch on Italy's economic woes
The markets last week fell for the first two days remained flat for the next two days and rose on Friday. The net fall for the BSESENSEX was 242.19 points or 1.36 per cent for the week, and it closed at 17,562.61 points. The NSENIFTY lost 76.50 points or 1.43 per cent to close at 5,284.20 points. The broader markets also fell but less than the benchmark indices with the BSE100, BSE200 and BSE500 losing 0.84 per cent, 0.69 per cent and 0.59 per cent respectively. The BSESMALLCAP was virtually flat losing a mere 0.02 per cent while the BSEMIDCAP gained 0.37 per cent. The BSEAUTO was a big loser with losses of 3.37 per cent and the BSEMETAL losing 2.47 per cent.
All eyes on Greece: Greek communists shout slogans in front of the
Parliament on November 4, 2011. PIC/AFP
The big losers in individual stocks were Tata Motors down 8.83 per cent, Sterlite down 7.34 per cent and ICICI Bank 5.14 per cent. The gainers were REC at 5.58 per cent, PFC at 5.51 per cent and SBI at 2.99 per cent.
There was one new listing when shares of Indo-Thai Securities listed on the exchanges. The shares were issued at `74. The shares made a high of `99.10 and a low of `18.10 and closed at `23 on the listing day. In the next two days the shares traded in a sideways manner and lost some more ground closing at `22.10, a net loss of 70.14 per cent for the week.
It was the case of one more issue being listed and turning out into another disaster and a nightmare for investors happened. The quality of IPOs coming to the markets has really deteriorated with fundamentals being ignored completely. I believe the time for the regulator to look into this and change the way the price discovery happens on listing day is now high time and needs to be changed with circuit filters being introduced.
The week saw Foreign Institutional Investors (FIIs) being net buyers of `474 crore while domestic institutions were net sellers of `785 crore. The Indian Rupee depreciated and closed at `49.11 against the US Dollar and lost 0.35 paisa in the week. Food inflation during the week was at a nine month high and has become a cause for concern. Petrol prices were raised once again and one wonders whether by continuing to subsidise diesel, the government is actually asking people to convert their cars from petrol to diesel.
On the global front events in Europe continue to dominate the market and events in Greece seem to be bordering on the point of becoming a joke.
The Greek Prime Minister who barely managed to win a vote of confidence had shaken the world when he called for a referendum on the package which was proposed by the European Union and also threatened to walk out of the EU. He has of course withdrawn the referendum plan but caused a mini turmoil in the markets. The ECB has cut rates by 25 basis points in a surprise move and all this is being done with an eye to easing the situation in Europe.
The results season continue to produce a mixed bag. The depreciation of the rupee, which happened in the first week of September, has affected the performance of many companies and this is visible in the results which continue to be declared by companies.
The three factors which have really hit companies are interest rates, rising input costs and the rupee depreciation. This situation would be a concern in the coming quarter as well.The coming week is a short week with holidays on Monday and Thursday.
A shortened week comes with its own set of problems and always makes the week more volatile. To add to the volatility, Friday would see the unique date 11/11/11. It would be interesting to see what this date holds for the global markets and us.
The week ahead would be driven by events connected with Greece and the next country would be Italy. Italy has already agreed to be monitored by the IMF and would be giving a progress report on a quarterly basis to them. The previous resistance levels over the last three months of 17,275-17325 on the
BSESENSEX and 5,225-5210 on the NSENIFTY would act as a key support on any falls in the market. In case these levels are broken there could be sharp falls.
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