Financial fireworks

Published: 19 November, 2012 11:02 IST | Arun Kejriwal |

A truncated week saw plenty of action

The short week on account of Diwali had plenty of action as the same came to an end. The markets lost ground on local news as well as global concerns. The SENSEX lost 374.31 points or 2.00 per cent to close at 18,309.37 points. The NIFTY lost 112.20 points or 1.97 per cent to close at 5,574.05 points. The broader indices like the BSE100, BSE200 and BSE500 lost less at 1.65 per cent, 1.52 per cent and 1.31 per cent respectively. BSE MIDCAP was almost flat losing a mere 0.04 per cent while BSE SMALLCAP was positive gaining 0.58 per cent.

A IS FOR ANGER AND AUSTERITY: Madrid, SPAIN: Medical workers take part in a demonstration against the Spanish government's latest austerity measures in the centre of Madrid. Thousands of medical workers gathered in Madrid to express their anger against the austerity measures. Pic/AFP

There were no sectoral gainers but the biggest loser was BSE AUTO down 2.97 per cent. BSE METAL lost 2.71 per cent, BSE CAP lost 2.15 per cent, and BSE FMCG lost 2.00 per cent. The best performing was BSE REALTY, which lost a mere 0.85 per cent. In individual stocks, United Spirits, which, in the previous week signed a deal to sell a stake to Diageo at a price of Rs 1,440 gained Rs 432 or 31.76 per cent to close at Rs 1,792. Tata Coffee was another big gainer at Rs 1,428 up 29.82 per cent. The other gainers were Bharti Airtel up 9.37 per cent, REC up 3.16 per cent and Titan up 1.91 per cent. The losers included Tata Motors down 5.56 per cent, Tata Steel down 5.25 per cent, Hind Petro down 5.01 per cent and Hero Honda down 4.72 per cent.

FIIs were buyers of shares worth Rs 985 crore worth domestic institutions turned to be sellers of shares worth Rs 736 crore. The Indian rupee depreciated during the week further and closed at Rs 55.18 against Rs 54.75 in the previous week.

Winter session of Parliament begins from Thursday, November 22. This would be a crucial session for the ruling UPA because they need reforms, which were proposed earlier to be passed by Parliament. Bills like FDI in multi brand retail; company's bill and insurance and pension bills are prominent among them. The uncertainty of the same being cleared with the UPA being in the minority in the Upper House could cause concern. The markets have taken cognizance of the same and there was selling witnessed last Friday.

There were two important events, which happened last week with key levels being broken during the week. The lows made on Friday are now lower than the lows made in the week ending 21st September 2012. Secondly, retail investors have become very bullish and while the rest of the market was falling these investors continued to be bullish and the net effect was the BSE SMALLCAP remaining positive.

Global markets were weak on the back of two concerns. The first is due to the 'fiscal cliff' of the US and the second is the concern of Europe and its citizens. The hardship being faced by people in Europe due to job cuts and reduction of salary is affecting people.

Wednesday would see the opening of an IPO from Tara Jewels after a very long time. The issue would close on Friday and would raise Rs 179.5 crore in a price band of Rs 225-230. The company is in the business of manufacturing jewellery and has 30 retail stores in various parts of the country. The issue has an offer for sale component of Rs 70 crore. The main object of the issue is to expand the retail chain and the company plans to open 20 new stores in the current year ending March 2013. The company had retail sales of Rs 183 crore in the year ended March 2012 and total revenues of Rs 1,401 crore with a net profit of Rs 54 crore.

The price earnings ratio of the company is just about 10 at the lower end. In recent weeks, shares of jewellery companies have been on the rise and there is interest in them. There is speculation as to the reason for the rise but certainly there is a view that the season has a lot to do with. The issue from Tara Jewels is certainly not cheap looking at track record of jewellery companies and may be skipped at this time.

With expectation of troubled times ahead it appears that the markets would be weak in the coming period. The BSE SENSEX has support at 18,196 points, then at 18,055 points, then at 17,899 points and finally at 17,649 points. It has resistance at 18,492 points, then at 18,617 points, then at 18,789 points and finally at 18,965 points. The NSE NIFTY has support at 5,539 points, then at 5,516 points, then at 5,448 points and finally at 5,395 points. It has resistance at 5,629 points, then at 5,675 points, then at 5,719 points and finally at 5,765 points. Readers would be well advised to wait for the anticipated fall before doing any bottom fishing.

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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