A wild week

Jun 18, 2012, 07:27 IST | Arun Kejriwal

Confusion was the name of the game

A wild week at the markets came to an end with some gains for the benchmark indices. The BSE SENSEX gained 230.96 points or 1.38 per cent to close at 16,949.83 points. The NIFTY gained 70.70 points or 1.39 per cent to close at 5,139.05 points. The broader indices like the BSE 500, BSE 200 and BSE 100 gained significantly lesser with gains of 0.90 per cent, 1.02 per cent and 1.14 per cent. The BSE MIDCAP lost 0.50 per cent while the BSE SMALLCAP gained 0.40 per cent.

Lifetime High
Amongst sectoral indices the biggest gainer was BSE FMCG up 3.38 per cent at 4,838.87 points. This, incidentally, is the lifetime high of this index. The other significant gainer was BSE IT up 2.64 per cent. The loser was BSE REALTY which was down 1.70 per cent. In individual stocks, PFC was the top gainer, up 8.81 per cent . Hindustan Unilever gained Rs 21.75 or 5.08 per cent to close at Rs 450.10, a lifetime high. It is more than a mere coincidence that HUL and BSE FMCG are both at lifetime highs. Other gainers included Infosys up 4.18 per cent, Coal India up 4.09 per cent and ITC up 3.5 per cent. Losers in individual stocks included Axis Bank down 1.62 per cent, Maruti down 1.51 per cemt and Sesa Goa down 1.52 per cent.

Extremely Confusing
The week gone by was choppy, volatile and extremely confusing. Poor IIP numbers should have seen the market falling, but comments by the SBI CMD that RBI should cut rates by 100 basis points, saw markets gaining. With three days of net 200 point moves on the SENSEX the net change was much smaller than expected. The week saw poor IIP numbers, stubborn inflation, marginally higher advance tax figures in the first installment, and a new front opening up against the Govt by way of Jagan Reddy of the YSR Congress winning 15 of 18 Assembly seats in by elections in Andhra Pradesh. Jagan also won the sole Lok Sahbha seat as well.

Presidential Candidate
The UPA has announced its presidential candidate as Pranab Mukherjee the incumbent Finance Minister (FM). It is believed that the PM may retain the portfolio of FM currently. Readers would recall that Manmohan Singh was the FM in the Narsimha Rao government of 1991-1996. Assuming this does happen, the markets would welcome it as reforms staller TMC is out of favour of the centre and it is likely that steps be taken shortly to increase diesel prices and introduce much needed reforms which have been stalled. Assuming things proceed on these lines or assumptions, one would see markets rallying.

FIIs were net buyers of shares worth Rs 939 crore, while domestic institutions sold shares worth Rs 533 crore. The Rupee appreciated marginally to Rs 55.40. Global markets gained but are keenly watching the outcome of Greece elections. It may also be mentioned that the concern that Greece may leave the Euro willingly or be asked to leave, is not an event that will happen within days of the election result. Secondly, in the end the decision of Greece may be a blessing in disguise in keeping the remaining Euro countries together.

Week Begins
The week now would begin with Greece election results and by mid-afternoon RBI would have announced the new rates. It is widely expected that rates would be cut this time around and with pressure being exerted by the Government for a bigger cut one may expect a 25 basis points cut in CRR and Repo each. If only the Repo rates are cut by 25 points, the market would react adversely, while a combined 50 points would be reason for rally. This would set the tone for markets on Monday itself. Monday would be a make or break day for the Indian bourses and positive or negative news on the election results from Greece could act as the icing on the cake or the last straw on the camel's back. One needs to keep fingers crossed and hope for the best.

Has Support
The BSE SENSEX has support at 16,778 points, then at 16,511 points, then at 16,265 points and finally at 16,065 points. It has resistance at 17,044 points, then at 17,093 points, then at 17,311 points and finally at 17,508 points. The NSE NIFTY has support at 5,090 points, then at 5,054 points, then at 5,013 points, then at 4,965 points and finally at 4,923 points. It has resistance at 5,167 points, then at 5,185 points, then at 5,244 points, then at 5,284 points and finally at 5,316 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

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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