Time to party

Seventh consecutive gain means celebration time

The week ended February 17 2012, has been the seventh consecutive gain for the markets. The BSE SENSEX has, with this gain, now moved up over 2800 points in the year, while the NIFTY has gained 940 points. This kind of gain has not been seen in a long time and it is driven purely by liquidity. It does not matter how it happens but nobody is complaining when markets go up. One should enjoy the party as long as it lasts, as all good things do come to an end. Fundamentals have certainly not changed but in the seven weeks, the mood certainly has and it has moved more than 180 per cent from pessimistic, to doubting, to optimistic and now euphoric to some extent.

Eye on Iran: Islamabad, Pakistan: Afghanistan's President Hamid
Karzai (l), Pakistan's President Asif Ali Zardari (c) and Iranian
counterpart Mahmoud Ahmadinejad (r) leave after a joint press
conference at the Presidential Palace in Islamabad recently. Iranian
President Mahmoud Ahmadinejad lashed out against foreign interference
in the region pics/AFP

The BSE SENSEX gained 540.66 points or 3.05 per cent to close at 18,289.35 points. The NSE NIFTY gained 182.70 points or 3.39 per cent, to close at 5,564.30 points. The broader markets saw the BSE100, BSE200 and BSE500 gain 3.63 per cent, 3.64 per cent and 3.69 per cent respectively. The BSE MIDCAP and BSE SMALLCAP gained 4.77 per cent and 3.27 per cent respectively. Amongst sectoral indices BSE REALTY gained a staggering 10.18 per cent, while BSE BANKEX gained 6.25 per cent and BSE AUTO gained 6.24 per cent. In individual stocks BHEL gained 16.67 per cent, Axis Bank up 14.68 per cent, PFC up 13.78 per cent and State Bank up 11.23 per cent. A surprise loser was Reliance Industries down 2.85 per cent and this also brought the BSEOIL&GAS down 1.44 per cent.

FIIs invested a staggering Rs 4,516 crore in the week while domestic institutions continued their selling and pulled out Rs 650 crore in the week. The Indian Rupee gained marginally and closed at Rs 49.27. The week ahead begins with a trading holiday today, i.e. Monday. The week also sees the expiry of February futures on Thursday and this series has seen NIFTY rise from 5158 to a current level of 5564, which is a gain of 7.87 per cent so far. This kind of gain is not normal and it has been a spectacular month so far. The week ahead sees the first IPO for the calendar year 2012 from MCX, the commodity exchange. This would be India's first listed exchange and the response is going to set the primary markets on fire. The price band is Rs 860-1032 and the company has reported a net profit of Rs 220.67 crore, for the nine months ended December 2011. The issue is an offer for sale and there would be no dilution of equity, which is currently Rs 50.99 crore. This company has a dominant position in the commodity market and has a market share in excess of 87 per cent. The average daily turnover of the exchange in the current nine months is over Rs 51,000 crore. EBITDA margins are extremely healthy at 70 per cent and net margins are at 46.5 per cent. Retail investors should apply for the issue as the grey market premium and the huge subscription therefore expected from HNI's (High Net Worth Individuals) would ensure a decent listing gain for them. The issue will be heavily oversubscribed, but would offer returns to retail investors. It would be interesting to see whether this success could galvanise the primary market, which seems to have had a horrible 2011.

The global scenario sees Greece at centre stage with the package being still debated. The Iran embargo and sanctions have ensured that crude prices have again begun to rise and would put a strain on the oil companies and the fiscal deficit. Brent crude oil has touched the 120-dollar mark already and is likely to be on an upward trend, because of the tension. The week ahead is a short one with one holiday and futures expiry making it extremely choppy and volatile. The key event this would be to see whether markets can hold on to the gains and continue the momentum or they would surrender the gains. Key support is the area of consolidation of seven days during the last two weeks of 17600-17850 on the SENSEX and 5325-5425 on the NIFTY. The BSE SENSEX has support at 18,208 points, then at 18,019 points, then at 17,829 points, then at 17,630 points and finally at 17,355 points. The resistance is at 18,396 points, then at 18,585 points, then at 18,709 points, then at 18,826 points and finally at 18,985 points. The NSE NIFTY has support at 5,537 points, then at 5,475 points, then at 5,408 points, then at 5,334 points, and finally at 5,255 points. The resistance is at 5,598 points, then at 5,662 points, then at 5,741 points, then at 5,806 points and finally at 5,864 points. The week ahead would be interesting and extremely choppy where one should trade cautiously.

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 isĀ  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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