Low and behold

Loss was the boss in the markets last week

Last week saw the markets opening on a weak note and Friday the 13th had the same effect with a sharp fall on the last day of the week. These saw the markets record losses of over 3 per cent each. Sensex lost 945.65 points or 3.21 per cent to close at 28,503.30 points while Nifty lost 290 points or 3.24 per cent to close at 8,647.75 points.

Union Minister of State for Finance Jayant Sinha speaks during the Budget Session in Lok Sabha. Pic/PTI
Union Minister of State for Finance Jayant Sinha speaks during the Budget Session in Lok Sabha. Pic/PTI

Broader indices lost less with BSE100, BSE200 and BSE500 down 3.11 per cent, 2.89 per cent and 2.78 per cent respectively. BSEMIDCAP lost 2.27 per cent and BSESMALLCAP 2.16 per cent. In sectoral indices, there was just one gainer in BSECONDUR up 1.21 per cent.

The sectoral losers were led by BSECAPGOODS down 4.98 per cent followed closely by BSEBANKEX down 4.95 per cent. BSEOIL&GAS lost 3.63 per cent. In individual stocks, the top gainer was Bharti Airtel up 15.08 per cent followed by Lupin at 2.18 per cent. The losers saw Hindalco lose 10.95 per cent followed by Power Finance 7.85 per cent, Axis Bank 7.54 per cent and L&T down 7.18 per cent.

Capital flight
There was a sell-off in global markets as it is now becoming increasingly clear that FED would raise interest rates in June 2015. With days of cheap money reducing, there is an apprehension that flight of capital would happen. Dow Jones closed at 17,749 points down 102 points or 0.60 per cent. The Indian rupee was under severe pressure and lost Rs 0.81 or 1.30 per cent to close at Rs 62.96, its lowest level in quite a few months.

FII’s continued to be buyers and bought equity worth Rs 937 crores during the week and domestic institutions were buyers of Rs 841 crores. The volatility in the market seems to have increased substantially. On Friday the 13th for example markets were up close to 0.9 per cent post the Insurance Bill but then some amount of basket selling, coupled with profit taking and higher retail inflation at 5.7 per cent saw markets lose from the high of the day almost 1.7 per cent or broadly speaking double of what they gained. This hurts traders more than investors.

In India, we have seen that the markets have been moving without any definite trend based on FII activity over the last week or 10 days. This is on account of year end considerations where positions of off-market financing are reversed in the first fortnight of March and then reintroduced in the first fortnight of April. This enables a sort of roll over at year end and eliminates records at year end for the beneficiary.

Business gains
The primary season is certainly not off to a good start. In the previous week, it was the just about scraping through by a badly bruised Ortel Communications, this time it is the turn of Adlabs Entertainment. At the end of normal bidding of three days the QIB portion which has a compulsory bucket size of 75 per cent received bids for a little over half the size at 40 per cent of the bucket.

The issue has been extended by the mandatory three days and will now close on Tuesday, March 17. The price band has been reduced by about 20 per cent at the lower end to make it attractive from the earlier Rs 221-230 to Rs 180-215. The concern on the issue now is that the primary object was to repay debt of the company which amount will get significantly impacted by this reduction in price and make the turnaround of the loss making theme park that much longer.

There is another IPO opening this week from the promoters of the ‘INOX’ group or Gujarat Fluorochemicals limited in the form of Inox Wind. The issue is priced in the band of Rs 315-325 with a discount for retail investors and employees. The present government is very bullish on renewable energy be it wind or solar and there would be a buzz about the issue. Investors should apply for one lot of 45 shares as the issue is going to receive more than 2.4 lakh applications.

Proceedings in Parliament and action on the remaining bills to be debated will be the key to markets in this week. Markets having run up in the last couple of months have reacted or corrected significantly and are now fairly valued. While a sharp uptick may not happen immediately with the financial year end round the corner, one must also remember that March series futures expiry and NAV (Net Asset Value) propping up would also happen at year end. Use dips to reinvest in the market.

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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