On a roll

The markets gained on three of the four trading sessions last week. This happened even though world markets were negative on the first three days. The BSESENSEX gained 773.90 points or 4.24 per cent while the NSENIFTY gained 254.55 points or 4.6 per cent. The broader indices gained less with the BSE100, BSE200 and BSE500 gaining 4.23 per cent, 3.96 per cent and 3.75 per cent respectively.

Customers buy gold jewellery in New Delhi on April 16, 2013. Gold prices tumbled to hit an over 15-month low in the national markets. Pic/AFP

The BSEMIDCAP gained 1.94 per cent while the SMALLCAP gained 1.76 per cent. This shows that the rally in the benchmark indices is much more and needs to become broad based if it has to continue. The BSEBANKEX was the top gainer up 7.50 per cent. Other gainers included BSECAP up 5.80 per cent, BSEREALTY up 5.28 per cent and BSEFMCG up 5.26 per cent. 

There was just one loser BSEIT down 2.33 per cent after the over 10 per cent fall in the previous week. In individual stocks, Axis Bank was the top gainer up 14.10 per cent followed by State Bank up 10.18 per cent, Maruti up 8.23 per cent and ICICI Bank up 7.46 per cent. On the losing side were gold loan companies Muthoot Finance down 21.36 per cent and Mannapuram Finance down 16.32 per cent.

The sharp fall in these companies is on account of the fall in gold prices and the concern that with interest on gold loans payable when the loan is returned, there could be losses suffered by these companies if gold prices were to fall further. TCS lost 4.01 per cent while NMDC lost 1.36 per cent. In a week when the markets were on fire, it’s difficult to find losers from the front running stocks.

India rocks
The week brought good news for India. Gold prices crashed, crude and commodity prices softened, the Indian Rupee gained, exports rose for the third consecutive month and wholesale inflation fell. Finance Minister P Chidambaram was on a road show in Canada and USA impressing upon FIIs the need to invest in India. Events over the last four days were all in his favour and one could tongue-in-cheek attribute them to the “Chiddu” factor.

Deficit details
The trade deficit was lower for March 2013 at USD 10.32 billion while for the year 2012-13 it is higher at USD 190.92 billion against USD 183.36 billion. The fact that exports have gone up is positive while total exports at USD 300 billion is well below the expected USD 350 billion. The saving grace is falling gold prices and crude oil which will positively impact our current account.

Good gains
FIIs were buyers of shares worth R1,485 crore after being sellers in the last two weeks, while domestic institutions turned sellers of shares worth R543.31 crore. On the back of sharp selloff in gold, the Indian Rupee gained 1.03 per cent to close at 53.96 against the dollar.

Gold talk
International gold prices which had cracked on Friday and Monday recovered a tad in India and were around R25,900-26,000 for 10 grams. Silver traded at around R43,500 per kg.

Coming up
This week has yet another trading holiday on Wednesday on account of Mahavir Jayanti. Thursday would see the expiry of April futures and could lead to sharp increase in volatility. The previous month NIFTY expired at a level of 5,682.55 which is lower than the current level by 1.77 per cent. Parliament begins its second leg of the budget session with important bills to be passed. At the same time we have enough controversies raised on account of the 2G JPC report. One sincerely hopes that the government does enough to allow parliament to function as the next general elections is not far away.

Each time the indices have had a jump of 4 per cent or more they have spent the next few weeks in a mode of consolidation. This time around should not be any different, except for one factor: the start of the Parliament session could see a period of sharp dissent between the government and the opposition. This can negatively impact the bourses and a sell-off might happen in the market. In any case, the upside from these levels is fairly limited. With results season on, individual companies’ performance could be based on their quarterly and annual results.

Key levels for the SENSEX are 18,650 and 19,425 while similar levels for the NIFTY are 5,675 and 5,875 respectively. The BSESENSEX has support at 18,855 points, then at 18,715 points, then at 18,425 points and finally at 18,235 points. It has resistance at 19,152 points, then at 19,335 points, then at 19,520 points and finally at 19,705 points. The NSENIFTY has support at 5,711 points, then at 5,641 points, then at 5,595 points and finally at 5,515 points. It has resistance at 5,824 points, then at 5,884 points, then at 5,938 points and finally at 5,973 points.

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

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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