Last week behaved as predicted with a sharp mid-week fall and a neutral Friday, while the rupee closed at Rs 62.87
The previous week behaved exactly as expected with the rally continuing for the first two days and a sharp fall in the next two. Friday was a neutral or flat day, and last week ended negative. The BSESENSEX lost 182.03 points or 0.89 per cent at 20,217.39 points. The Nifty lost 60.70 points or 1.00 per cent to close at 5,995.45 points. The broader indices like the BSE100, BSE200 and BSE500 lost 0.97 per cent, 0.90 per cent and 0.80 per cent respectively.
The BSEMIDCAP gained 0.22 per cent while BSESMALLCAP gained 0.64 per cent. The top sectoral gainer was BSECAPGOODS up 2.05 per cent. Other gainers included BSEREALTY up 0.41 per cent and BSEOIL&GAS up 0.26. The losers were led by BSECON DURABLE down 2.26 per cent. Other losers included BSE AUTO down 1.97 per cent and BSE HEALTHCARE down 1.87 per cent.
In individual stocks the biggest gainer was Jindal Steel up 3.89 per cent. Other gainers included Financial Technologies up 13.70 per cent and MCX 8.20 per cent. Just Dial was up 11.97 per cent and this stock is currently going through a wild phase. Historically this kind of price behaviour happens when a stock is being distributed. The losers were led by Sesa Sterlite down 8.74 per cent. The other losers included Bajaj Auto down 6.85 per cent and Canbank down 6.67 per cent.
Foreign Institutional Investors (FIIs) continued their purchases and bought shares worth Rs 1,924 crore while domestic institutions sold shares worth Rs 813 crore. The difference in the FIIs trend has been that in the last three trading days of last week they have been net neutral, and if this become a trend, it could be worrisome. The rupee was under severe pressure after a very smart rally but yet managed to close with a minor gain of 24 paisa or 0.38 per cent to close at Rs 62.87.
The Dow Jones continued to gain and was up 103 points or 0.64 per cent to close at 16,064.77 points. Gold prices have been falling internationally and closed at $1,243 an ounce quite close to the low made in June of $1,211. In India, the price of gold is Rs 31,000 per 10 grams, substantially higher than the Rs 25,000 which we had seen in June, courtesy the periodical import duty which has been levied and the depreciating rupee which has fallen from 55-56 to the current Rs 63.
In other news hydro power producer NHPC opens its buyback offer at Rs 19.25 for 123 crore shares at a cost of Rs 2,368 crore on November 29. These shares were issued at Rs 36 in August 2009. The buyback is being done so that the government is able to tender shares and raise some money from divestment or disinvestment. Pfizer announced the merger of Wyeth with itself in a ratio of 10 shares of Wyeth to get 7 shares of Pfizer. This will bring the combined entity into the top ten pharma companies in the country. Oil explorer Cairn India has also announced a buyback, terms and conditions of which are be known in a board meet to be held on Tuesday, November 26.
The petroleum minister Veerappa Moily has once again reiterated that diesel prices would be deregulated before May 2014. He has also maintained that there would be no-one time increase in prices. He was speaking at a CII conference in Mumbai recently. One fails to understand how a price hike of Rs 10 per litre can be achieved with just about four months before the model code of conduct is enforced. Simple mathematics says that 0.50 per month and Rs 10 to be recovered means 20 months and this is assuming that neither crude prices nor the rupee change. The current under-recoveries of Rs 10 per litre are killing the PSU companies whether it is the OMCs like IOC, HPCL, and BPCL or our oil exploration companies ONGC and OIL. Maybe it was just to assure captains of industry and potential investors when IOC is again divested. Well, nothing much is likely to happen on this front.
The beginning of this week is likely to see some up move. October series futures had expired at 6,164.35 points. The current market is lower by 169 points or 2.74 per cent. Besides this GDP data for July-September would be announced on Friday. Key levels for the Sensex are 19,910 and 20,625 while they are 5,915 and 6,145 for the Nifty. The support for the Sensex is at 20,107 points, then at 19,925 points, then at 19,856 points, then at 19,675 points, and finally at 19,525 points. It has resistance at 20,357 points, then at 20,565 points, then at 20,735 points, then at 20,965 points and finally at 21,150 points. The Nifty has support at 5,962 points, then at 5,908 points, then at 5,847 points, then at 5,805 points and finally at 5,782 points. It has resistance at 6,039 points, then at 6,097 points, then at 6,147 points, then at 6,217 points and finally at 6,303 points.
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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