The bourse gets a bloody nose

It has been a damaging past week

The opening and closing days of last week, were days with big losses and ensured that the week was a bloody and damaging week for the bourses. The damage at the end of five days was 722.11 points or 4.45 per cent on the BSE SENSEX, which closed at a new two-year low of 15,491.35 points. In the process, it also made a new low of the year at 15,425.20 points. The NSE NIFTY lost 215.10 points or 4.42 per cent to close at 4,651.60 points. 

The new low on the NIFTY was 4,628.20 points. With this fall, the entire gains and more have been erased in two weeks. Against a gain of 1151 points on the SENSEX, the loss in two weeks on a closing basis is 1355 points. 

 The broader markets like the BSE100, BSE200 and BSE500 lost 4.56 per cent, 4.69 per cent and 4.81 per cent while the BSE MIDCAP and BSE SMALLCAP lost more at 6.11 per cent and 6.03 per cent. The big sectoral losers were BSE CAPITAL down 10.30 per cent, BSE REALTY down 8.22 per cent, BSE BANKEX 7.25 per cent and BSE METAL down 7.08 per cent. The ones, which held themselves, were BSE FMCG which lost a mere 0.70 per cent and BSE IT with losses of just 0.37 per cent.

In individual stocks, Hindustan Unilever and Infosys closed with gains while the big losers were the steel players JSW Steel down 13.23 per cent, Sterlite down 11.83 per cent, Sail 10.28 per cent and Tata Steel down 8.36 per cent. Banking stocks Axis Bank lost 9.18 per cent, SBI lost 9.87 per cent and ICICI Bank lost 7.65 per cent.
In the capital goods sector L&T lost 12.31 per cent while BHEL lost 8.95 per cent. Virtually all sectors participated in the fall barring software because of the depreciating rupee and the FMCG because of its defensive nature.

There was enough of news flow for the week and likely events will keep the markets on tenterhook going forward. RBI in its mid-quarter policy review on Friday decided to keep the CRR, SLR, Repo and Reverse Repo rates unchanged. On Thursday, FITCH downgraded 7 US and European banks and there is an expectation that the sovereign rating of Italy and Spain is likely to be downgraded in the immediate future. IIP numbers were way below the mark and very clearly indicate to a slowdown in the Indian economy. Inflation for the week was lower but for the month was high and not enough to make the RBI breathe easy. Advance tax numbers for the quarter were also below the mark and indicate the slowdown that is being talked about. The 7 per cent GDP growth is now impossible and people are talking of various numbers around the 6 per cent level, which makes Indian growth a concern.

Gold and silver has also reacted during last week and lost ground. The RBI intervention on the rupee helped it to strengthen compared to Thursday close and the rupee closed at Rs 52.68 for the week, against the previous week's close of Rs 52.05 but of the lows of Rs 53.76. Foreign Institutional Investors (FIIs) were sellers for the week with net sales of equity of Rs 1673 crore while domestic institutions bought equity worth Rs 1481 crore. There is a lot of concern on the equity front and with the market losing in excess of 24 per cent for the year so far and the rupee depreciating another 17 per cent. India is the worst performing market globally.

This week would continue to be choppy and though the case involving the home minister is now occupying centrestage, there would be concerns about political developments. With just two weeks to go for the calendar year 2011 to end fund managers are under pressure to improve their performance. The markets are likely to be under further pressure and sitting at new lows for the year and a close, which is at a two year low, would add to the pressure. We are far away from any significant turnaround in terms of value or time and any rally should be used for shorting the market and not for trying to buy at the bottom.

The BSE SENSEX has support at 15,254 points, then at 15,157 points, then at 14,990 points, then at 14,855 points and finally at 14,657 points. It has resistance at 15,898 points, then at 16,092 points, then at 16,360 points and finally at 16,542 points. The NSE NIFTY has support at 4,580 points, then at 4,549 points, then at 4,504 points, then at 4,454 points and finally at 4,389 points. It has resistance at 4,770 points, then at 4,831 points, then at 4,910 points and finally at 4,961 points.  There is every possibility that after two consecutive big weekly losses, the market may consolidate and actually gain. If it does it does not indicate a turnaround but a mere pullback. However it looks unlikely that we would end with significant positive gains for the week. There could also be some NAV support as the year ends. One should use all such opportunities to exit the market. Don't get tempted looking at the levels of individual stocks.

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