15 November,2010 08:27 AM IST | | Arun Kejriwal
The fireworks continued post Diwali. The markets fell and Friday was a bloodbath with the SENSEX losing 423 points and the NIFTY losing 123 points on Chinese markets weakness.
The net loss for the BSE SENSEX was 848.07 points or 4.03 per cent for the week and closed at 20,156.89 points. The NSE NIFTY lost 240.8 points or 3.81 per cent to close at 6,071.65. The markets have been weak for the first two days, a small uptick on Wednesday and two really bad days to end the week badly battered and bruised.
Wave
Our markets have been riding the wave and doing extremely well and have been aided but relentless FII purchases coupled with impressive performance by India Inc.
The FII purchase has slowed down and it appears that the buying has not only stopped, they have turned sellers. Friday saw the highest sales that they have made in almost six months, and their net sales were at Rs 782 crore. This was on top of the small net sales that they have made on Wednesday and Thursdayu00a0 last week.
Response
On the IPO front, the FPO from Power Grid received excellent response and the same was more than what was expected or anticipated. If one looks at the overall response the same was oversubscribed 14.88 times with QIB at 18.52 times, HNI at 28.86 times and retail 3.85 times.
The employee portion was also oversubscribed. The response has also made the share price weaken as the open interest in futures rose quite sharply and hit the ceiling. The share price has fallen and the discount to FPO price has reduced in the last few days of trade.
Opening
The newlyu00a0 listed shares, which have not yet completed trading for one month as yet, had a weak performance for the week. Of the 13 listed shares only two rose while 11 lost for the week.
Two shares lost over 22 per cent for the week, which included Bedmutha Industries and B S Transcomm. One other stock lost over 10 per cent. No action on the IPO front last week but this week is likely to see Manganese Ore India Limited opening its divestment issue.
Consolidation
Coming to this week we seem to be in for a prolonged period of consolidation. Markets may open weak, recover and then weaken again. However, on a net net basis there seems to be plenty of support for the SENSEX at just around the level of 19950u00a0- 20075 points. Below these levels we have support at 18.850, which looks unlikely being broken this week.
On the resistance side the SENSEX has to surmount 20,350 and then go past 20.750 before one can become bullish again. The NSE NIFTY has support in the range of 5980-6000 and then at 5850 and finally at 5710-5725. On the upside there is resistance at 6175, 6250, 6325 and assuming it breaks out 6425-6450.
The upside looks most unlikely, however if we see another fall today, a short-term reversal on Tuesday is almost a certainty. Smart traders may look to buy on weakness on Monday (today).u00a0u00a0
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 https://ak57.in
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