A number of factors played an important role last week, including global trends but all eyes are towards the upcoming Lok Sabha elections
The last week opened on a quiet note and drifted down over the next three days. Friday saw a sharp sell-off and then markets recovered sharply to end positive for the day and helped in some recovery for the week.
A shopper (R) browses as a vendor talks on the phone at his shop selling election campaign paraphernalia in New Delhi. Pics/AFP
The SENSEX lost 109.99 points or 0.50 per cent to close at 21,809.80 points. The NIFTY lost 22.45 points or 0.34 per cent at 6,504.20 points. The BSE100, BSE200 and BSE500 lost 0.36 per cent, 0.42 per cent and 0.45 per cent respectively. The Midcap lost 0.56 per cent but the Smallcap gained 0.23 per cent.
The top sectoral gainer was BSECAPGOOD which gained 3.47 per cent. The other gainers included BSEREALTY up 2.07 per cent followed by BSEOILGAS up 1.5 per cent. The high beta and volatile BSEBANKEX saw a sharp recovery on Friday and closed up 1.39 per cent. The losers were led by BSEIT down 6.09 per cent and followed by BSETECH down 5.20 per cent and BSEMETAL down 4.82 per cent.
In individual stocks, the biggest gainer was IDFC up 8.77 per cent followed by BPCL up 6.93 per cent. Other gainers included Hero Moto up 6.09 per cent and capital goods major L&T up 4.84 per cent. The losers were led by IT major Infosys down 9.41 per cent after it mentioned that there performance would be at the lower end of the guidance given. Other losers included Sesa Sterlite down 7.81 per cent, Tata Steel down 7.70 per cent and Hindalco down 7.54 per cent.
FIIs were big sellers on Monday but bought back all of that and more on the next four days to end with net purchases of Rs 302 crore for the week, while domestic institutions were sellers of equities worth Rs 1,792 crore. The Indian Rupee lost Rs 0.10 to close at Rs 61.19. The strength in the Rupee is remarkable and is one reason why IT stocks are under pressure.
The situation in Crimea, a part of Ukraine has turned quite messy. The referendum which took place on Sunday indicates that they would like to go with Russia, a move which is being decried by European nations and the US. The stand-off with sanctions being imposed on Russia could derail the rally in stocks globally. Indian markets did fall on this expectation but saw a great recovery on Friday.
One must remember that while global cues are important, elections to the Lok Sabha which happen once in five years are a bigger event and therefore, more important. While the Crimea news will continue to dog global markets for some time providing the volatility, it certainly has seen gold prices rise quite sharply with the international price rising to $1,384 per ounce.
Economic data during last week was better with wholesale inflation declining to 4.68 per cent in February which is a nine month low, while consumer or retail inflation fell to 8.1 per cent against 8.79 per cent in January. Industrial production or IIP registered a positive growth of 0.1 per cent for January after being negative for the last four months.
The government has sold 10 per cent of its holding in IOC to OIL India and ONGC at Rs 220 per share which is a discount of Rs 49.20 or 18.27 per cent to the closing price of Rs 269.20 on Friday at the BSE. The divestment has fetched the government Rs 5,340 crores.
The ETF (exchange traded fund) of PSU units through which the government plans to sell 3% of the equity and raise Rs 3,000 crores from ten companies opens on Wednesday, March 19 and closes on Friday, March 21. The companies which form part of the index include BHEL, Coal India, CONCOR, Engineers India, GAIL, IOC, OIL India, ONGC, PFC and REC.
The basket has 59 per cent weightage in energy and all these are dividend paying companies. The value of the basket or its NAV is Rs 18.74 as of Friday. Retail investors would be allotted units at a 5 per cent discount, to the weighted average of trades in these 10 shares on the three days that the fund is open. There is a longer term benefit where loyalty bonus in the form of 1 unit for every 15 would be allotted if units are held for 1 year from the date of allotment. The scheme looks attractive for retail investors.
Key levels for the SENSEX are 21,525 and 22,055 while they are 6,410 and 6,575 for the NIFTY. The support for the SENSEX is at 21,637 points, then at 21,525 points, then at 21,357 points and finally at 21,130 points. It has resistance at 21,917 points, then at 22,031 points, then at 22,197 points and finally at 22,335 points.
The NIFTY has support at 6,451 points, then at 6,415 points, then at 6,366 points and finally at 6,306 points. It has resistance at 6,557 points, then at 6,587 points, then at 6,623 points and finally at 6,697 points. The markets will continue to be driven by global cues and FII buying. However, polls in India are far more important and unless there is a catastrophe, Indian markets would be largely politics driven. Trade cautiously but use sharp dips to re-enter.
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.