The markets were weak for the first four days and there was selling pressure on September futures expiry on Thursday. Friday seemed to be a completely different day and the markets wiped out the losses of the first four days and closed up for the week. In the week beginning Monday October 1, there was a national holiday on October 2, due to Mahatma Gandhi’s birth anniversary and this is effectively a three-day week. In the week ended Friday, the BSE SENSEX closed with gains of 9.91 points or 0.05 per cent at 18,762.74 points. NIFTY gained 12.15 points or 0.21 per cent to close at 5,703.30 points. The broader indices fared much better with the BSE100, BSE200 and BSE500 gaining 0.67 per cent, 0.85 per cent and 1.05 per cent respectively. The market breadth was much better and the BSE MIDCAP gained 2.72 per cent while the BSE SMALLCAP gained 3.06 per cent.
The sectoral gainers were BSE FMCG up 4.00 per cent, BSE REALTY up 3.91 per cent and BSE HEALTH up 2.32 per cent. The losers were BSE OIL down 2.17 per cent, BSE METAL 1.41 per cent and BSE IT down 1.01 per cent. In individual stocks, the top gainers were BHEL up 6.26 per cent, LIC HSG up 5.19 per cent, ITC up 3.92 per cent and JSW STEEL up 3.42 per cent. The losers included Cairn India down 5.57 per cent, Bharti Airtel down 5.11 per cent, Sterlite down 4.65 per cent and ONGC down 4.41 per cent.
FIIs continued their buying spree and bought shares worth R8,875 crore during the week. This included about half of the amount from the Cairn India deal in which Cairn PLC sold 15.27 crore shares for roughly R5,000 crore. Domestic institutions continued their selling spree and were net sellers of shares worth R1,724 crore. Total FII purchases during September 2012 were R20,769 crore while domestic institutions were net sellers of R3,645 crore.
Monday, October 1, was a fairly quiet day and markets were range bound. They closed with small gains on the back of positive cues from Europe. The SENSEX gained 61 points while NIFTY gained 15 points. The salient feature of Monday’s trade was the fact that intraday highs made on Friday could not be crossed, even though the markets closed positive. This would be the first challenge for the market and a crucial level to be crossed and then to be sustained if the momentum is to be maintained.
The present Finance Minister (FM) P Chidambaram is market savvy and knows how the market sentiment could be turned to his advantage. In a span of just about two weeks covering three Fridays on September 14, 21 and 28, the SENSEX has risen 1029.93 points or 77.25 per cent of the 1,333.18 points that the index gained in the whole of September. The NIFTY saw a similar rise of 333 points or 74.87 per cent of the 444.80 points. This clearly shows how much the market was devoid of news and the immediate positive reaction when there was some news flow.
The market breadth has, during the last couple of weeks, increased significantly and the broader market is gaining much more than the benchmark indices like the SENSEX and NIFTY. This clearly indicates that retail participation is increasing and the market mood turning for the positive. September futures expired and saw the market slipping on the last day of the settlement as expected and mentioned in last week's column as profit taking caused a decline in values.
Result season for the July to September quarter or Q2 FY2012 would start in about 10 days and this would be the real trend decider for the markets hereon. In the last quarter the SENSEX has gained about 1400-1500 points, which is about 8 per cent, which factors in decent growth in the quarterly results. The performance from here on in the market would be directly based on the results, the prospects and the management perception of the future performance. The Indian Rupee has further strengthened and closed the week at R52.84 a gain of 1.14 per cent against the US dollar. Sector rotation has begun and sectors, which are up one week as the top gainer, are down 3the next and vice versa. An example of this is the BSE FMCG, which is the top gainer this week at 4 per cent and was the biggest loser in the previous week at 2.05 per cent. This rotation indicates that the momentum seems to be running out of steam and needs new and strong news flow or drivers to continue to remain positive.
The week ahead which now has a mere three days left looks a tough week for the markets and would be range bound. It has a negative bias and technically looks like it needs to consolidate at these levels for some time. BSE SENSEX has support at 18,684 points, then at 18,512 points, then at 18,385 points and finally at 18,269 points. It has resistance at 18,855 points, then at 18,904 points, then at 19,027 points and finally at 19,221 points.
The NSENIFTY has support at 5,679 points, then at 5,649 points, then at 5,627 points and finally at 5,553 points. It has resistance at 5,731 points, then at 5,746 points, then at 5,782 points and finally at 5,842 points. Trade cautiously and wisely and await quarterly results trend before taking fresh positions.
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
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