Battered and bruised

Aug 31, 2015, 07:59 IST | Arun Kejriwal

A manic Monday did irreparable damage to the Sensex. The recovery was not able to make up for that

Last Monday, the markets had a huge fall with Sensex losing over 1,600 points and Nifty almost 500 points. This was on account of China and the entire world was hammered that day. Manic Monday saw battered and bruised markets. They did recover thereafter during the course of the week but irreparable damage had been done.

CHINESE CAUSE: The Sino markets have been causing ripples across the world economy. PIC/AFP
CHINESE CAUSE: The Sino markets have been causing ripples across the world economy. PIC/AFP

When the week ended Sensex was down 973.69 points or 3.56 per cent at 26,392.38 points, and Nifty 298 points or 3.595 down at 8,001.95 points. Broader markets lost similar if not more with BSE100, BSE200 and BSE500 down 3.65 per cent, 3.75 per cent and 3.84 per cent. BSEMIDCAP lost 4.08 per cent and BSESMALLCAP 5.32 per cent.

Tad gains
In sectors, the only gainer and that too by a tad was BSEMETAL up mere 0.02 per cent. Losers were led by BSECAPGOOD down 6.09 per cent, followed by BSEBANKEX 4.76 per cent, BSEHEALTHCARE 4.31 per cent and BSEPOWER 4.03 per cent.

In individual stocks, state iron ore miner NMDC was the top gainer up 8.22 per cent followed by Coal India 2.32 per cent, Cairn India 2.32 per cent and Tata Motors 2.30 per cent. Losers were led by PSU bank Canara Bank down 14.34 per cent, Union Bank 12.42 per cent, PNB 1028 per cent. Other losers included Tata Power 10.42 per cent and Wockhardt 18.21 per cent.

The Indian rupee lost 32 paisa or 0.49 per cent to close at R66.14. FII’s were big sellers and sold shares worth R12,635 crores while domestic institutions were buyers of Rs 8,050 crores. Dow Jones closed at 16,643.01 points, up 183.26 points or 0.49 per cent.

Indian Oil
The government successfully completed its sale of Indian Oil and raised Rs 9,300 crores approximately at the floor price of Rs 387. The share price of India Oil closed the week with gains at Rs 405.75, a weekly gain of 2.76 per cent.

The primary market sees two issues this week in Prabhat Dairy which is raising R300 crores from a fresh issue and an offer for sale of 1.47 crore shares in a price band of Rs 140-147. The issue has opened on Friday, closes on Tuesday, September 1. The company sells 75 per cent of its products ‘B to B’ and the balance ‘C to C’.

The second IPO which opens today, August 31 and closes on Wednesday, September 2 is from Sadbhav Infrastructure Project Limited which is tapping then markets with a fresh offer for Rs 425 crores and an offer for sale of 64.71 lakh shares in a price band of Rs 100 to 103. The company has completed its anchor allocation of Rs 209.99 crores on Friday.

More RBI cuts
The RBI governor Raghuram Rajan has said that he has not finished with rate cuts hinting that they may happen sooner than later. The US Fed meets on September 15 and 16 and the world would be waiting for the outcome post the China devaluation and meltdown. August futures expired at 7,948.45 points, down a 472.85 points or 5.61 per cent.

The markets went down with a big gap on Monday and have become vulnerable in the process. The gap which was left needs to be filled or crossed over in the coming days if the markets have to recover ground. The gap on the Sensex was between 27,131-26,720 and on the Nifty at 8,225-8,060. Top end of the gap needs to be filled if the markets are to turn bullish otherwise this level would act as a resistance going forward.

Markets are in a state of flux and need to consolidate and move up. There is still a ray of hope that GST may be cleared in a special session. Keep your fingers crossed and hope for the best. Markets could be choppy and volatile. The key drivers are China and global news.

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
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