Friday fall after poll dance

May 23, 2016, 08:54 IST | Arun Kejriwal

The five-state election results on Thursday cast a shadow on trading at Dalal Street

The markets continued to remain volatile and gained for the first two days of the last week and lost on the remaining three days. The intraday volatility averaged almost 300 points on the Sensex daily. Intraday volatility is the difference between the high and low on a daily basis. The Sensex closed the week with losses of 187.67 points or 0.74 per cent while Nifty lost 65.20 points or 0.83 per cent to close at 7,749.70 points. The broader market saw BSE100, BSE200 and BSE500 lose 0.94 per cent, 0.99 per cent and 1.03 per cent respectively.

AIADMK, BJP,  the Left, Trinamool Congress (TMC) and Congress won in Tamil Nadu, Assam, Kerala, West Bengal and Puducherry respectively when results were declared on Thursday. Pic/AFPAIADMK, BJP,  the Left, Trinamool Congress (TMC) and Congress won in Tamil Nadu, Assam, Kerala, West Bengal and Puducherry respectively when results were declared on Thursday. Pic/AFP

There was just one sectoral gainer in BSEREALTY up 2.13 per cent. The losers were led by BSECAPGGOODS down 2.27 per cent followed by BSEPOWER 1.95 per cent and BSEPSU 1.75 per cent. In individual stocks, the top gainer was ONGC up 4.31 per cent followed by Dr Reddy 4.22 per cent and Maruti 2.65 per cent. The losers were led by Bank of Baroda down 12.52 per cent followed by State Bank 7.32 per cent, PNB 5.42 per cent, Lupin 5.23 per cent and Cipla 4.52 per cent.

The Indian rupee lost 67 paisa or 1.00 per cent to close at R 67.44. Dow Jones was marginally down losing 34.38 points or 0.20 per cent at 17,500.94 points.

Result day
Thursday saw the results of five states being declared and two of the states had new governments with the Congress being ousted from both states. While they lost Assam to BJP, they lost Kerala to the Left.

Interestingly, they had made a makeshift alliance with the Left in West Bengal, but the alliance suffered losses. TMC led by Mamata Banerjee fared even better at the cost of the Left and returned to power with over 2/3rd majority. In Tamil Nadu, AIADMK romped home but with a lower majority than last time. Here again the Congress was in an alliance with the DMK.

Immediately after winning West Bengal, the Chief Minister to be and party leader of the TMC, Banerjee announced her support for the GST Bill. It appears the bill would be taken up for discussion and voting if necessary in the Monsoon session of Parliament.

The week ahead sees May series futures expire on Thursday, May 26. The current close as of Friday of 7,749.70 points is lower by 97.55 points or 1.24 per cent. The markets are under pressure and were weak in closing on Friday. They need to recover from these levels failing which there would be technical weakness in the markets and bears would certainly push the market down.

Cigarette and FMCG major ITC declared its results which were impressive. The company has also declared a bonus issue in the ratio of 1 bonus share for every two shares held. Shares of ITC closed at R 329.95, and were up 1.55 per cent on Friday when results were declared and 3.34 per cent for the week.

Share games
In primary market news, shares of Parag Milk Foods Limited listed on Thursday and had decent gains. The share against an issue price of Rs 215 closed at Rs 244.45, a gain of 13.70 per cent. There are no issues slated to open for subscription in the coming week.

Mega PSU bank State Bank of India is to declare its results on Friday, May 27. The results from this company would be keenly watched to see whether the provisions made in the third quarter was the peak or similar or higher provisions are made this time. Depending on the results from SBI, the PSU banks could get a push upward or downwards. Friday would be a key day for the markets and incidentally it would also be the first trading day of the June series.

Choppy and volatile markets to continue in the week ahead. Expiry of futures would be a drag on the markets which are currently looking tired and showing signs of weakness. Global cues and crude prices which have risen in the last few weeks could act as a further dampener for the markets. Trade cautiously.

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