The week gone by had a sharp sell-off on Friday which was not reflected in the indices only because of a stellar performance from Infosys. The results from the company were not only better than expected but the body language of the top management seems better.
The more than 15.5 per cent gain in Infosys saw the markets be saved the embarrassment of Friday being a washed out day, but not enough to save the week from ending with losses as the markets were struggling through the week.
The BSESENSEX lost 84.44 points or 0.43 per cent to close at 19,663.64 points while the NIFTY lost 64.85 points or 1.08 per cent. The broader indices like the BSE100, BSE200 and BSE500 lost 1.10 per cent, 1.24 per cent and 1.31 per cent respectively. The BSEMIDCAP and BSESMALLCAP were bigger losers down 2.15 per cent and 2.11 per cent respectively.
In individual sectors, the gainers were BSEIT up 7.82 per cent and BSEAUTO up 0.36 per cent. The losers were led by BSECAP down 5.01 per cent, BSEFMCG down 3.72 per cent and BSEMETAL down 3.12 per cent. In individual stocks, Infosys was the biggest gainer up 15.55 per cent, Tata Motors up 4.71 per cent and Wipro up 4.03 per cent. The losers were led by Hind Unilever down 7.54 per cent, Union Bank 7.11 per cent, BHEL down 6.29 per cent and L&T down 5.96 per cent.
FIIs continued to be big buyers during the week and bought shares worth Rs 3,865 crore while domestic institutions sold shares worth Rs 1,827 crore. The Indian Rupee gained 0.37 paisa to close at 54.70. Industrial output numbers for November 2012 were disappointing and were negative 0.01 per cent compared to 6 per cent positive in the previous year. The numbers were disappointing even considering that Diwali holidays impacted production in the month.
Arshiya International, a smallcap stock, was hammered out of shape losing a staggering 43.84 per cent in the week, bulk of which was lost in the last three days when the stock closed at down circuit on each day. The company had recently retrenched roughly 20 per cent of its workforce and not paid employees for some time. In order to instil confidence in the investing and analyst community, the management organised a conference call and denied everything that had appeared in the newspapers. Arshiya has a total debt of Rs 2,500 crore including long term and working capital and a market cap of a mere Rs 413 crore. The allegations which have been raised are serious and no serious effort has been made to resolve the pending issues. The management has infused Rs 42 crore into the company towards part payment of warrants and to give comfort to investors. More than two-thirds of the promoter equity is pledged and with such a sharp fall, there is every possibility that pledged shares may be sold in the market and create further pressure.
Railway fares for the general class were increased for the first time in 10 years while they were raised for the AC and First classes for the fourth time in the year. This made markets believe that the long awaited diesel hike would happen shortly but that did not and was taken well by the market. Elections to three north-eastern states would be held in the last fortnight of February and the time left for the government to make further policy announcements before the budget is now quite little. Inflation numbers would be announced on Monday and a lot would depend on them as RBI would review these numbers before taking a call on the interest rate cut in their meeting scheduled for January 29.
The week ahead would be crucial for the markets as last week’s movement is quite disappointing. Infosys saved the day and now needs to trade and sustain the Rs 2,750 level. This is the level it fell from post its announcement of January-March results in April 2012. The share has been an underperformer over the last nine months and this revival of performance would be keenly watched.
The key levels for the markets would be 19,850 and 19,550 on the SENSEX and 6,050 and 5,850 on the NIFTY. The BSESENSEX has support at 19,575 points, then at 19,435 points, then at 19,355 points and finally at 19,237 points. It has resistance at 19,797 points, then at 19,864 points, then at 20,015 points and finally at 20,145 points. The NSENIFTY has support at 5,922 points, then at 5,897 points, then at 5,847 points and finally at 5,812 points. It has resistance at 5,995 points, then at 6,015 points, then at 6,073 points and finally at 6,116 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 http://ak57.in
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