Looking so tired and wired

Apr 11, 2016, 10:36 IST | Arun Kejriwal

Trade cautiously and stock up, as election results and monsoon predictions are drivers at Dalal Street

Markets were extremely choppy last week, and lost ground after opening on a positive note. While correction began when RBI announced its monetary policy, the fact remains that markets were overbought and needed a correction either way. Sensex lost 595.70 points or 2.36 per cent to close at 24,673.84 points while Nifty lost 157.85 points or 2.05 per cent to close at 7,555.20 points. Broader markets lost less with BSE100, BSE200 and BSE500 losing 1.92 per cent, 1.70 per cent and 1.48 per cent respectively.

RBI governor Raghuram Rajan speaks to the press at the RBI headquarters in Mumbai after the RBI cut its key interest rate to a five-year low of 6.5 per cent. Pic/AFP
RBI governor Raghuram Rajan speaks to the press at the RBI headquarters in Mumbai after the RBI cut its key interest rate to a five-year low of 6.5 per cent. Pic/AFP

BSEHEALTHCARE led sectoral gainers and was up 0.71 per cent followed by BSEPOWER 0.63 per cent and BSEOIL&GAS 0.57 per cent. BSEBANKEX was the top loser down 4.07 per cent, followed by BSEAUTO 2.35 per cent and BSEFMCG 2.15 per cent. In individual stocks, top gainer was Lupin up 5.19 per cent followed by Indian Oil 4.87 per cent and BHEL 4.75 per cent. Losers were led by Maruti Udyog down 7.90 per cent, followed by ICICI Bank 7.21 per cent.

Rate cut
RBI cut repo rates by 25 basis points on expected lines, but the market tumbled that day. It opened weak and kept on losing momentum as the day progressed. The fall was quite severe and markets never recovered from this blow for the rest of the week.

Dow Jones lost 215.79 points or 1.21 per cent to close at 17,576.96 points. The Indian Rupee lost 21 paisa or 0.32 per cent to close at 66.47. FII’S after being buyers in the month of March turned sellers and sold through the week. The quantum of sales was not that big, but for the moment, the trend has witnessed a change and we need to again reverse before markets begin to rise.

In primary market news, the issue from microfinance lender Equitas Holdings Limited was very well received with the issue subscribed 17.21 times. QIB portion was subscribed 14.93 times, HNI 57.29 times and retail 1.40 times with about 5.82 lakh applications received. Infibeam Incorporation Limited listed last Monday and managed to hold on to its price closing at R443.20, again of 2.59 per cent against its issue price of R432.

Short week
The week ahead would see results season unfolding with Infosys declaring its results on Friday, April 15. This week is a short trading week, with only three trading days, as Thursday and Friday are trading holidays. Given this, there would be added pressure and hence volatility on Wednesday which becomes the last day of the week.

This would be more so as these holidays are India specific and global markets would remain open, thereby creating a three-day impact when our markets reopen.

Markets are looking tired and need to consolidate at these levels after having a great March, when they were up over 10 per cent. There are no drivers for the market currently and the possibility of GST would be known only when parliament reassembles. Impact of state election results, quarterly results and how the monsoon is faring, will be potential drivers.

Investors are advised to trade cautiously. Things look better going forward if one were to invest with a twelve-month horizon.

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 risk.

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