Ups and downs

The week gone by behaved on predicted and expected lines. It ended positively on Monday and would have been weak at the end had it not been for a strong showing on Thursday. The BSE SENSEX closed at 18,682.31 points with a miniscule gain of 7.13 points or 0.04 per cent. The NSENIFTY gained 8.20 points or 0.14 per cent to close at 5,684.25 points. The broader indices like the BSE500, BSE200 and BSE100 were mixed, with the BSE500 closing positive with gains of 0.01 per cent. The other two lost 0.05 per cent and 0.04 per cent. The BSEMIDCAP index lost 0.08 per cent while the BSESMALLCAP gained a respectable 0.84 per cent.

Illustration/Amit Bandre

The sectoral indices were also a mixed bag with the gainers being BSEFMCG (up 2.65 per cent), BSEHEALTH (up 1.26 per cent) and BSEBANKEX (up 0.81 per cent). The losers included BSEMETAL (down 2.53 per cent), BSEREALTY (down 1.36 per cent) and BSECAP (down 0.96 per cent). In individual stocks, the top gainer was Axis Bank (up 7.14 per cent), ITC (up 5.12 per cent), Canara Bank (up 4.38 per cent) and Cairn India (up 1.96 per cent). The losers included REC (down 4.51 per cent), JSW Steel (down 4.30 per cent), PFC (down 4.26 per cent) and LIC Housing (down 3.51 per cent).

New benchmark
The week saw plenty of events happening, including the announcement of results. ITC produced a great set of numbers and was a star performer. Post market TCS declared numbers which clearly prove that Infosys and TCS seem to be following different strategies and have different areas of focus. TCS had operating margins of 26.8 per cent. The positive impact of these results could be felt when markets open on Monday. In the current calendar year, the difference in the two companies has been clearly demonstrated. TCS, based on its December 11 close of R1,161, has gained 11.11 per cent to close at R1,290. In the same period, Infosys has lost 13.82 per cent to close at R2,383 against R2,765. This has also led to Infosys surrendering its benchmark status.

Anniversary issues
Friday, October 19, happened to be the 25th anniversary of the famous Black Monday crash. On that day, the Dow Jones Index lost 508 points or 22.61 per cent to close at 1,738.74 points. Indian markets were closed for Diwali at that time and survived the global carnage. When they reopened, we lost 2.5 per cent but insignificantly less than the global crash. In respect to the anniversary, the Indian markets lost 109.62 points or 0.58 per cent, while the Dow Jones lost 205.43 points or 1.52 per cent.

Slow down
FIIs have been big buyers and in the first fortnight of October, had bought shares worth R9,400 crore. This seems to have slowed down considerably with the current week’s purchase at a mere R363 crore. Domestic institutions, which were net sellers in the first fortnight to the extent of R1,750 crore, turned buyers for a mere R5 crore. The Indian Rupee lost ground considerably, weakening to R53.84 to the dollar against R52.81 in the previous week. The FII activity of last week cannot be considered to be a trend and needs to be watched carefully for the next couple of weeks.

News recap
In other news, the Tatas, through their company Indian Hotels, have made yet another bid to acquire international hospitality company Orient Express for USD 1.2 billion. This offer was made at a premium of about 41 per cent to the previous day’s price of the company. Kingfisher Airlines’ license was cancelled while the Board of Control for Cricket in India (BCCI) cancelled the Indian Premier League (IPL) team Deccan Chargers.

What’s ahead
The week ahead has a mid-week holiday on Wednesday on account of Dussehra. Thursday sees the expiry of October futures and the September series had expired at a value of 5,649.50 points. Friday’s close of 5,684.25 points is a mere 34 points higher which is insignificant. This would not put any sort of buying or selling pressure on expiry day. The only significant point would be the previous day’s holiday which could impact prices on expiry depending on global cues. Another thing that needs to be noted and highlighted is that markets last week were range bound and traded in a very small band. The SENSEX had a range of 18535-18806 while the NIFTY’s range was from 5633.90– 5722.50 points.

The week ahead would continue to be driven by results in the current quarterly reporting season. This would impact individual stocks and their prices. The SENSEX has important support level at 18,500 and resistance at 18,900 while the NIFTY has similar levels at 5,585 and 5,735. The BSESENSEX has support at 18,606 points, then at 18,542 points, then at 18,448 points and finally at 18,315 points. It has resistance at 18,764 points, then at 18,825 points, then at 18,921 points and finally at 19,055 points. The NSENIFTY has support at 5,659 points, then at 5,637 points, then at 5,607 points and finally at 5,565 points. It has resistance at 5,710 points, then at 5,728 points, then at 5,762 points and finally at 5,805 points. It appears that in the week ahead, markets would need to take a direction and there could be some downside. 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 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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