Nifty on song

The Sensex on the other hand is not doing well in a volatile market atmosphere

The markets continued to remain highly volatile and while the Nifty made yet another high, Sensex failed to do so. Both these indices along with the BSE100 registered weekly losses whilst the others gained. The BSESENSEX lost 235.89 points or 0.82 per cent to close at 28,458.10 points. Nifty lost 49.95 points or 0.58 per cent to close at 8,538.30 points.

The markets are seeing ups on the Nifty and downs on the Sensex which has investors worried about the year ending stocks. Pic/Atul Kamble
The markets are seeing ups on the Nifty and downs on the Sensex which has investors worried about the year ending stocks. Pic/Atul Kamble

BSE100 lost 0.37 per cent while BE200 and BSE500 gained 0.11 per cent and 0.31 per cent respectively. BSEMIDCAP gained a handsome 2.22 per cent while BSESMALLCAP gained 1.81 per cent. In sectoral indices, gainers were led by BSEFMCG up 5.62 per cent followed by BSECONDUR 3.25 per cent and BSEREALTY 1.82 per cent. Losers were led by BSEOIL&GAS down 3.18 per cent, followed by BSEIT 3.12 per cent and BSETECH down 2.70 per cent.

Cigarette ban
In individual stocks, the top gainer was ITC up 7.84 per cent after the government announced that the ban on sale of loose cigarettes would not be anytime soon.

Other gainers included Jindal Steel 8.56 per cent and Union Bank 5.83 per cent. Financial Technologies gained 21.18 per cent, Wockhardt 19.43 per cent and Jet Airways on falling ATF prices was up 13.66 per cent. The losers were led by Hindalco down 6.12 per cent, Dr Reddy 5.75 per cent and Infosys down 5.00 per cent. The stock is ex-bonus.

The government did its first divestment in the form of an OFS (Offer For Sale) of SAIL. It sold 5 per cent and garnered Rs 1,715 crore. The issue was oversubscribed 1.8 times in the non-retail section and 2.6 times in the retail segment. Ever since the announcement of the OFS the stock was under pressure and lost 7.28 per cent to close at Rs 82.80, marginally below the floor price of the offer of Rs 83.

The arbitrage available to retail investors who got a 5 per cent discount seems to have factored in the price damage. The success of this offer will bring about the next offer from Coal India and that could happen in a week or then only in January 2015. The world particularly the stock market would begin its annual holiday in about a fortnight’s time for Christmas and New Year.

The mood is already celebrating as markets have done well this time. With institutional investors who would go on holidays, the action is shifting to midcap and smallcap where by and large institutional activity is substantially lower. Even last week while the benchmark indices lost ground, the midcap and smallcap gained ground and saw all the action.

Dow gains
The Dow Jones continued to gain and closed at 17,658.358 points, a gain of 130.54 points or 0.74 per cent. FIIs were buyers of Rs 1,466 crores while domestic institutions were buyers of Rs 462 crores. The Indian rupee gained 25 paisa or 0.40 per cent to close at Rs 61.77 to the US dollar. Oil continues to be under pressure with Brent crude trading under $ 70.

The government cut prices of petrol and diesel and also raised excise duties on them without making them a pass through. This effectively means that the full effect of reduction in crude prices has not been done and the government in all likelihood would not have to provide for oil subsidies in the second half for sure. LPG cylinder prices for non-subsidised gas were cut by a sharp 15 per cent.

The IPO from Monte Carlo Fashions was subscribed 7.83 times but the surprising fact is that the HNI category which subscribes with leveraged funding chose to ignore this issue. This bucket was subscribed a mere 1.71 times and could pose problems for the issue on listing. The issue was overpriced and the track record of the promoter towards investors or minority shareholders is just not good enough.

New offers
The promoters of Zuari Agro have made a voluntary offer to acquire 25.90 per cent of Mangalore Chemicals at Rs 91.92. The difference this time is that it is not making this open offer in concert with Vijay Mallya and has upped the offer price which is voluntary from the earlier Rs 81.

It still remains lower than the price at which Deepak Fertilizers had acquired shares. The share price of Mangalore Chemicals gained Rs 9.25 or 11.34 per cent to close at Rs 90.85.

The week ahead would be volatile and all action would shift to the midcap and smallcap space. The benchmark indices may actually go in to correction while this space bereft of substantial institutional activity may see huge volatility.

It’s time to selectively book profits and with action shifting to the midcap and smallcap space time to particularly take money off this segment when stocks move sharply. Trade cautiously in a volatile and superheated market and atmosphere.

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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