The markets began the last week on a very weak note and the BSE SENSEX was down sharply intra-day at 15,801 points, a loss of 361 points. The markets rallied from these levels for the day and the week and made a high of 16,756.08 points on last Thursday. This rally was worth a significant 775 points. The markets then corrected themselves and finished at a level of 16,453.76 points. The BSE SENSEX gained 291.70 points or 1.80 per cent while the NSE NIFTY gained 75.50 points or 1.55 per cent to close at 4,943.25. It is important to note that the markets are looking vulnerable and though the market has made a marginal high compared to the previous month's low of 15,765 points, we are not out of the woods. The fact that we seem to be coming so close to the level and then rallying is making the markets vulnerable. The broader markets like the BSE500, BSE200 and BSE100 gained 0.46 per cent, 0.67 per cent and 0.98 per cent while the BSE MIDCAP and BSE SMALLCAP lost 1.50 per cent and 2.27 per cent.
There was a lot of activity which was news based. Sun TV was a big loser with losses of Rs 57.15 or 19.75 per cent on political news concerning the Maran brothers and their purported involvement in the Aircel deal. Reliance ADAG group shares lost on the same reason and almost all their shares were down between 10-20 per cent. The proposed mining bill saw Coal India losing Rs 33.45 or 9.13 per cent on the proposal that 26 per cent of profits would be shared with the locals. Sesa Goa also lost ground but a mere 3.95 per cent. The market did not like the proposal of Kingfisher Airlines raising further capital and converting some of its existing loans into equity and lost Rs 4.25 or 17.53 per cent to close at Rs 20. Software giant Infosys gained Rs 194 or 8.29 per cent on the fall in the rupee value.
FMCG major ITC and Hindustan Lever were gainers with gains of 3.26 per cent and 2.79 per cent respectively. Reliance gained Rs 37 or 4.80 per cent. The week saw the list of PG Electroplast Limited, which had issued shares at Rs 210. The issue had a very volatile week and made a weekly high of a staggering Rs 548 and closed at Rs 312.05 registering weekly gains of Rs 48.6 per cent. The current week sees a number of issues, which have opened, beating the September 30 deadline of having audited accounts, which are less than six months old. Most of these issues are not worth writing about and do not merit either attention or investment.
There is however one issue from Flexituff International Limited which stands out amongst the half dozen issues which are open. The company is issuing shares in a price band of Rs 145-155. The issue comprises of a fresh offer of 45 lakh shares and an offer for sale of 22.5 lakh shares making the total issue size 67.5 lakh shares. The company manufactures FIBC, Geo-textile fabric, reverse printed BOPP woven bags and PP bags including leno bags amongst others. The company reported revenues of Rs 514.8 crore for the year ended March 2011, which has risen from Rs 322.16 crore for the previous year. The net profit after tax was Rs 27.43 crore for the year. The issue looks attractively priced considering the future and the growth prospects of the industry. The company is the only unit approved to supply packaging products for the pharmaceutical and food grade. This makes it a niche player and therefore enjoys decent margins as well.
The market looks vulnerable and it is imperative that it breaks out from the current lacklustre movement that it is going through. It needs to break out from the present state of affairs otherwise there could be a breakdown, which could see new lows being made in the markets. The BSE SENSEX has support at 16,323 points, then at 16,051 points, then at 15,983 points, then at 15,801 points and finally at 15,765 points. It has resistance at 16,664 points, then at 16,756 points, then at 16,872 points, then at 17,004 points and finally at 17,191 points. The NSE NIFTY has support at 4,903 points, then at 4,802 points, then at 4,789 points, then at 4,758 points and finally at 4,715 points. It has resistance at 5,004 points, then at 5,065 points, then at 5,105 points, then at 5,173 points and finally at 5,229 points. The trading holiday on Thursday on account of Dusshera could act as trend changer midweek. Investors and traders are advised to be cautious during the week as there could be sharp movements.
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.