Trade cautiously and use rallies to exit the markets
Last week was great for the markets. With two festival holidays on Wednesday and Thursday the mood was even better.
A Ganesh idol immersed at Jogeshwari
The markets gained handsomely and this was the first weekly gain after five consecutive weekly losses, which saw the BSE Sensex lose a staggering 2,873.87 points or 15.35 per cent.
The NSE Nifty too lost 886.15 points or 15.73 per cent. The rebound last week was big. But, it appears to be too much too soon and most likely looks unsustainable.
In just three days the BSE Sensex gained 973.03 points or 6.14 per cent to close at 16,821.46 points, while the NSE Nifty gained 292.20 points or 6.15 per cent to close at 5040 points.
The gains were across the board and the broader indices like the BSE100, BSE200 and BSE500 gained 5.88 per cent, 5.78 per cent and 5.59 per cent respectively.
The BSE Midcap and BSE Smallcap gained 3.31 per cent and 3.22 per cent. Amongst the sectorial indices the biggest gainers were the BSE Metal, which gained 11.52 per cent, and the BSE Realty, which gained 10.09 per cent.
Amongst stocks Tata Steel gained 15.69 per cent, Sesa Goa gained 13.47 per cent, Reliance gained 11.81 per cent and PFC gained 11.06 per cent. News of the arrest of Everonn's Managing Director saw the share crash in a single day and close at Rs 351.45, a weekly loss of Rs 64.95 or 15.6 per cent.
The previous week saw Foreign Institutional Investors (FIIs) buying stock worth Rs 2,200 crore and the Domestic Institutions buying worth Rs 600 crore.
The mood was optimistic all around and global cues did help in the sentiment. Unfortunately things turned negative last Friday and this would have a bearing this week on our markets as well.
The bond issue from Shriram City Union was listed previous week. After initial selling pressure, the bond issue managed to close at just around the issue price of Rs 1000.
Retail investors who have applied in this issue of duration of 5 years would get a coupon rate of 12.2 per cent with yearly payment of interest.
The week ahead sees yet another bond issue from Religare Finvest Limited. There is likely to be another hike in the rates by RBI in their mid-month review meeting and this may force the issuer to price this when tapping the bond market.
The company is likely to price its bond between 12.40 and12.6 per cent coupon rate making this issue attractive and interesting from the investor's perspective. In the equity side there is an issue opening from PG Electroplast Limited. The company is tapping the capital markets with its issue, which opens on September 7 and closes on September 9.
The price band is Rs 190-210 and the company would raise between Rs 109 crore to Rs 121 crore. The company is a Electronics manufacturing service provider for OEM's in India. The company manufactures Television sets, air conditioners, DVD players and CFL Lamps. It also makes water purifiers.
The key to the company's products is that that they involve plastic injection moulding and manufacture of Printed Circuit Boards (PCB).
The company reported a topline of Rs 428.53 crore and a profit after tax of Rs 17.85 crore for the year ended March 2011. The company looks interesting and promising and one should keep this in one's portfolio after our markets have stabilised as currently the volatility is not good for the health of the investor.
Coming to this week, one is likely to see consolidation in the market.
The previous week saw a very sharp rally, which is unsustainable and needs to consolidate before any upward move takes place. The rain gods have been generous, pointing to a good crop in October.
The week is likely to be volatile with both sided movements unlike the last few weeks where the markets moved in just one direction. Trade cautiously and use rallies to exit the markets.
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.