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Indian economy: Markets slump despite recovery

As economic data is declared this week, Parliament continues with its final session

Markets were weak last Monday and even though they gained on the remaining three days with Tuesday being flat, it was simply not enough to recover lost ground of Monday. The Sensex lost 137.29 points or 0.67 per cent to close at 20,376.56 points. The Nifty lost 26.20 points or 0.43 per cent at 6,063.20 points.

Economic data is expected to be declared in the coming week
Economic data is expected to be declared in the coming week

The BSE100, BSE200 and BSE500 lost less at 0.32 per cent, 0.21 per cent and 0.16 per cent. The BSEMIDCAP gained 0.46 per cent while the BSESMALLCAP gained 1.04 per cent. The top sectoral gainer was BSEHEALTH up 2.25 per cent followed by BSEAUTO up 1.92 per cent and BSEPOWER up 1.51 per cent. The losers were led by BSEIT down 3.25 per cent. The other losers included BSETECH down 2.62 per cent and BSEOIL&GAS down 1.48 per cent.

Stocks
In individual stocks the biggest gainers were the PSU companies led by Coal India up 8.87 per cent. Others included NTPC up 7.59 per cent and Power Finance up 6.81 per cent. Tisco was up 7.95 per cent. In midcap and smallcap space Seed Company, Kaveri Seed was up 18.85 per cent while pipe manufacturer Astral Poly was up 10.48 per cent. The losers were led by BHEL down 10.01 per cent. Other losers included IT majors TCS down 4.15 per cent while Infosys was down 3.57 per cent.

Jet Airways continued to be weak, after reporting losses for yet another quarter, and lost 3.36 per cent. Foreign Institutional Investors (FIIs) were net sellers of Rs 1,353 crore for last week, while domestic institutions were buyers of equities worth R 795 crore. The Indian Rupee gained R 0.40 to close at R 62.28. Dow Jones had a strong performance last Friday, and as a result of the same, gained 95 points or 0.60 per cent at 15,794 points for the previous week.

Ahead
This week, we will see economic data being declared; beginning with trade data and followed by inflation numbers, both consumer and wholesale. The Tata twins, Tata Steel and Tata Motors would also be declaring results. Both are multi-country, multi-location companies and would give a global perspective to their performance.

Besides this, the Parliament would continue with its last session, before the house is finally adjourned, to bring an end to the UPA-2 led government. Elections would be held in April-May later this year. The GDP for Financial Year (FY) 13-14 is expected to be at about 4.9 per cent, helped by the downward revision of figures for FY 12-13, as per the Central Statistical Office (CSO). The biggest setback has been the manufacturing sector and things don’t seem to be improving on this front.

Selling
The government is selling 10 per cent stake in Engineers India Ltd, through a follow on offer in a price band of R 145-150, with a fixed discount of Rs 6 per share to retail and eligible employees. The Qualified Institutional Buyer (QIB) portion has been subscribed on day two and it appears that the issue will sail through.

The negative of the company has been that the share price has been on a downslide, over the last three years, and the share price has reduced from R 325-330 to the current price of R 150. The previous follow-on public offer (FPO) was in a price band of R 270-290 with a 5 per cent discount to retail employees.

The company is trying to diversify and mitigate risk of having business from just the government companies primarily in India. Their principle area of expertise is the hydrocarbon space and they have done projects in fertilisers and executed them in geographies like Africa and the Middle East. While the downside from current levels seems limited, concern of improvement in business climate may still take a couple of quarters. I would suggest that retail investors should apply for the issue.

Votes
National Spot Exchange (NSEL) matter seems to be finally catching up on Financial Technologies (FT) and MCX. The board of MCX has restricted the voting rights of the promoters of the company to a mere 2 per cent, based on the directive of Forward Market Commission (FMC). Though the matter is in the court of reduction of stake with this latest salvo being fired, it appears that relief can only come from the court.

Points
The week ahead would be range bound on a weekly basis but volatile as usual intraday. Key levels for Sensex are 19,965 and 20,185 while they are 5,935 and 6,195 for Nifty. The support for Sensex is at 20,289 points, then at 20,120 points, then at 20,066 points, then at 19,960 points and finally at 19,737 points.

It has resistance at 20,457 points, then at 20,583 points, then at 20,625 points, then at 20,893 points and finally at 21,085 points. Nifty has support at 6,036 points, then at 5,981 points, then at 5,937 points, then at 5875 points and finally at 5,821 points. It has resistance at 6, 102 points, then at 6,135 points, then at 6,195 points and finally at 6,256 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 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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