Cautious optimism

Jul 09, 2012, 07:14 IST | Arun Kejriwal

Markets would look for cues from global markets, which have been weak over the last couple of days

The markets inched upwards and though there was a small correction on the last day of the previous week, markets managed to close positive. The BSESENSEX gained 91.14 points or 0.52 per cent to close at 17,521.12 points. The NSENIFTY gained 38.05 points or 0.72 per cent to close at 5,316.95 points. The broader indices like the BSE100, BSE200 and BSE500 gained more compared to the benchmark indices at 0.99 per cent, 1.09 per cent and 1.26 per cent respectively. The BSEMIDCAP and BSESMALLCAP outperformed the benchmark indices with gains of 2.60 per cent and 4.26 per cent.

Illustration/Amit Bandre

The sectoral indices saw BSEREALTY gained 4.60 per cent, while the BSEBANKEX gained 3.00 per cent. On the losing side were BSEIT down 1.91 per cent and BSEFMCG down 1.65 per cent. In individual stocks gainers included Chambal Fertilisers up 10.25 per cent, IRB Infra up 8.27 per cent and JSW Steel up 5.30 per cent. The losers saw Hero Motocorp down 2.66 per cent, TCS down 2.45 per cent, ITC down 2.41 per cent and Infosys down 2.36 per cent. The market breadth was positive for the previous week with the sharp gains witnessed in the Midcap and Smallcap indices. The benchmark indices struggled with gains on the first four days and at one point of time on Friday last week, had lost all the weekly gains when the SENSEX touched a low of 17,425 points against the previous week’s close of 17,429 points. The NIFTY made a low of 5,287 against the close of 5,279 points. This fall shows how small and vulnerable the rise has been last week.

FIIs were big buyers last week with net purchases of Rs 5,783 crore, while domestic institutions were net sellers to the extent of Rs 712 crore. The Indian rupee after initial gains lost ground to the dollar but managed to close marginally stronger at Rs 55.44 against Rs 55.60 in the previous week.

There is no clarity on GAAR as far as FIIs are concerned. Mauritius from where most of these FIIs come is in discussion with the Indian Government in trying to resolve the issue and one hears of various options being offered. The only clarity one has is the issue of getting due attention and is likely to be resolved sooner than later looking at the stakes involved. 

The current mood in the market is optimistic on expectations of reforms being brought by the new FM who is also the PM. So far nothing has happened and the next date after which something could be expected is once the Presidential Elections are over on the 19th of July and the swearing of the President on the 25th July. The concern would be that just about a week later the monsoon session of Parliament would begin.
The week ahead sees results for the first quarter of the financial year 2012-13 kick in. IT major Infosys declares results on Thursday, July 12. The last time it declared quarterly results the share had lost substantial ground and the price opened with a downside gap of over Rs 200. The stock had closed the previous day at Rs 2750 and the high of thee result day was Rs 2540. This high has not been crossed in the last three months, while the low has been Rs 2200. The share has been under pressure in the last few days and it would be interesting to see how the company fares. If there is any concern voiced by the company on immediate visibility of business it would be negative for the company and the price could break the 2200 mark.

Markets would look for cues from global markets, which have been weak over the last couple of days and FII activity. After being big buyers, last week, their action this time will help in deciding how our markets trend.

The BSESENSEX has support at 17,446 points, then at 17,317 points, then at 17,182 points, then at 17,033 points and finally at 16,918 points. It has resistance at 17,563 points, then at 17,704 points, then at 17,816 points, then at 17,955 points and finally at 18,045 points.

The NSENIFTY has support at 5,295 points, then at 5,254 points, then at 5,205 points, then at 5,146 points and finally at 5,095 points. It has resistance at 5,333 points, then at 5,372 points, then at 5,416 points, then at 5,458 points and finally at 5,495 points. The markets might correct at the opening of the week beginning on Monday, July 9. 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. 

Go to top