Gains ensure no pains
Driven by the political scenario, we can expect some new highs
The BSE SENSEX gained 204.60 points or 0.98 per cent at 20,996.53 points. The NIFTY gained 83.80 points or 1.36 per cent to close at 6,259.90 points. The broader indices like the BSE100, BSE200 and BSE500 gained 1.30 per cent, 1.25 per cent and 1.27 per cent respectively.
The BSE MIDCAP gained 1.00 per cent while BSE SMALLCAP gained 2.07 per cent. The top sectoral gainer was BSE BANKEX up 4.98 per cent. Other gainers included BSECAPITAL GOODS up 4.71 per cent and BSE POWER up 4.56 per cent.
There were just two losers with BSE FMCG down 2.74 per cent and BSE AUTO down 0.20 per cent. In individual stocks, the biggest gainer was Axis Bank up 10.91per cent followed by Tata Power up 10.82per cent. Other gainers included Jindal Steel up 9.95per cent and BHEL up 9.8per cent. The few losers were led by Hind Unilever down 5.65per cent and ITC down 2.66per cent. Pharma major Dr Reddy was also down 2.54per cent.
The FPO (follow on offer) from Power Grid was subscribed 6.74 times and received excellent response from all categories of investors. The success of this issue will, in all probability, push and goad the government to bring more issues to the market and offer the 5 per cent discount to retail investors. The oversubscription of almost 10 times in the HNI category would see more short covering today, as investors who have hedged their positions cover their shorts as they would be allotted lesser shares.
The UP sugar crisis has been resolved with the central government agreeing to fund the sugar mills through loans and also giving them an interest subvention of 12 per cent. Though the crisis may have been averted, the fact of the matter is that sugar mills are not viable at the current cost of cane and selling price of sugar.
FII's have again begun buying equities in a big way and were buyers of Rs 3,645 crore last week against a net purchase of Rs 7,100 crore, in October. Domestic institutions were net sellers of Rs 1,100 crore in the week against Rs 482 crore in the previous month. The Indian Rupee appreciated Rs 1.03 paisa or 1.65 per cent to close at Rs 61.41.
In international news from the US, the all-important tapering timing is the key to global liquidity and markets. Unemployment data released on Friday saw jobless claims fall from 7.3per cent to 7.0per cent while the consensus was 7.2per cent. Most thought this would be an indication for tapering to begin sooner than later. Markets however took it as positive for the economy and responded with an almost 200 point gain on Friday. The Dow still failed to erase earlier losses during the week and ended with a loss of 66 points or 0.41 per cent to close at 16,020.
Coming to our markets and what would happen in the week ahead it would be driven by politics. The markets have been rooting for the BJP and the results from the four states where counting was held today indicates a strong performance for the BJP. They have routed the Congress in Rajasthan and improved their tally in Madhya Pradesh.
In Chhattisgarh, they have managed to hold on, even though it is just about. In Delhi while no party has a majority, the BJP is the largest party and is marginally short of a majority. The Congress on the other side is decimated and has won a mere eight seats out of 70 and the sitting Chief Minister has lost. Call it resentment, call it the cohesiveness of the BJP under Narendra Modi or call it incumbency, it is a combination of factors and the ruling Congress in Delhi and Rajasthan has been jolted.
The markets will celebrate this performance in the only way they know, by taking the markets up and making yet another new high. Thereafter, the sustainability will depend on the action of FII's and how they look at the markets. Now we also have the RBI policy review meet and in less than three weeks the quarter will be over and it will be results season all over again.
Markets live on hope and expectation and with this political results there will be plenty of both. Key levels for the SENSEX are 20,655 and 21,325 while they are 6,225 and 6,355 for the NIFTY. The support for the SENSEX is at 20,929 points, then at 20,809 points, then at 20,724 points, then at 20,525 points, and finally at 20,125 points.
It has resistance at 21,054 points, then at 21,184 points, then at 21,321 points, then at 21,555 points and finally at 21,708 points. The NIFTY has support at 6,235 points, then at 6,175 points, then at 6,110 points, then at 6,030 points and finally at 5,975 points. It has resistance at 6,279 points, then at 6,325 points, then at 6,395 points, then at 6,455 points and finally at 6,490 points. The political victory is what will be driving the markets this week.
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
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