The markets are on a roll and the NIFTY has touched levels last seen around Diwali 2010. The SENSEX is a few 100 points away but the gains last week were strong and across the board. The BSE SENSEX gained 546.68 points or 2.79 per cent to close at 20,122.32 points. The NSE NIFTY gained 163.25 points or 2.75 per cent to close at 6,107.25 points. The broader indices gained similar with the BSE100, BSE200 and BSE500gaining 2.58 per cent, 2.51 per cent and 2.52 per cent respectively. The BSE MIDCAP gained 2.57 per cent while BSE SMALLCAP gained 2.55 per cent.
The BSE FMCG was the top gainer up 4.67 per cent. Other gainers included BSE AUTO up 4.04 per cent, BSE CONSUMER up 3.83 per cent and BSE BANKEX up 3.06 per cent. There were no losers but BSE CAP gained the least, up a mere 0.29. The top gainer in individual stocks was Tata Motors up 7.85 per cent. Other gainers included Hindalco up 8.31 per cent, Canbank up 7.42 per cent and ITC up 7.24 per cent. The losers were led by Coal India down 4.51 per cent, Jet Airways down 3.30 per cent and NTPC down 3.20 per cent. IIP (industrial production) numbers for March 2013 saw a growth of 2.5 per cent, led by the manufacturing sector, which grew 3.2 per cent. The manufacturing sector has a 75 per cent weightage in the sector. The annual IIP numbers saw a growth of just 1 per cent, which is the lowest ever in the last 20 years. The expectation is that the worst is now behind us and things would improve going forward.
FIIs have been aggressive investors pumping in close to Rs 4,600 crore during the week while domestic institutions sold shares worth Rs 1,350 crore. The one alarming event witnessed is the sharp drop of the rupee on Friday in particular and the week in general where despite soft crude prices the rupee lost Rs 0.87 or 1.61 per cent. The Friday fall was the single largest drop in four months. Markets seem to be ignoring all the political news and currently is defying the adage 'Sell in May and go away'. Markets have risen quite sharply and are now at a 28-month high with levels last seen in Diwali 2010 having been reached. This is a little unpalatable, as the fundamentals and political scene currently compared to what existed in October-November 2010 is quite different.
The abrupt adjournment of Parliament two days before its scheduled close ensured that no further bills were debated or passed. The weekend saw the
resignations of the two ministers concerned further increasing political activity in the capital. The demand for the resignation of the Prime Minister, Manmohan Singh, is now being made on the basis that he handled the coal ministry in the period when these coal blocks were allocated and the change in the CBI report was made to protect him.
In such a scenario, the markets continuing to rally with the benchmark indices having gained over 10 per cent, in the last four weeks is quite unexpected. The only explanation for the same could be the poor volumes in the market and virtually zero interest from retail and HNI investors. The next part of the rally could be led by a left out feeling creeping into investors who may feel cheated that the markets have risen over 10% without their participation. This rally could be sharp and could leave a lot of people trapped at higher levels for a fairly long time.
There is no news or events coming up this week, which would impact markets other than results. The key drivers in the week would be the way FIIs trade and to some extent the Indian Rupee. Crude prices have been on a declining trend, which is good for our economy and also the fact that FIIs have been investing big time.
As mentioned earlier these two positives still do not explain why the rupee fell and that needs to be carefully watched.
The markets will be quite choppy and volatile next week. To be quite honest, the movement in the markets is baffling and has caught me by complete surprise. Global markets have been driven by excess liquidity and India is no exception. However at some point of time economy and politics combined need to match with the market conditions. That time is not very far.
Key levels for the SENSEX are 19,825 and 20,355 while similar levels for the NIFTY are 6,020 and 6,225 respectively. The BSESENSEX has support at 20,069 points, then at 19,977 points, then at 19,735 points and finally at 19,561 points. It has resistance at 20,161 points, then at 20,252 points, then at 20,376 points and finally at 20,524 points. The NSENIFTY has support at 6,089 points, then at 6,045 points, then at 5,982 points and finally at
5,911 points. It has resistance at 6,119 points, then at 6,151 points, then at 6,216 points and finally at 6,284 points. Trade cautiously.
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
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