On recovery road

May 25, 2015, 08:12 IST | Arun Kejriwal

The last week was a positive one, with ground being regained on both the Nifty as well as the Sensex

The markets were in recovery mode last week and regained ground. The interesting thing was that it went up on Monday and Wednesday and consolidated on Tuesday and Thursday and inched up on Friday. All in all a positive week with the Sensex gaining 633.30 points or 2.32 per cent to close at 27,957.50 points.

The markets keenly await the first news of monsoon. File pic
The markets keenly await the first news of monsoon. File pic

Nifty gained 196.60 points or 2.38 per cent to close at 8,458.95 points. The broader indices gained less with the BSE100, BSE200 and BSE500 gaining 2.15 per cent, 2.04 per cent and 1.98 per cent respectively. The BSEMIDCAP gained 0.53 per cent and BSESMALLCAP gained 1.51 per cent.

Sectoral performance
The top sectoral gainer was BSEIT up 4.72 per cent followed by BSETEFC 4.01 per cent, BSEHEALTHCARE 3.30 per cent and BSECAPGOOD 2.68 per cent. There was just one loser in BSEMETAL down 0.23 per cent on the back of impairment done by Tata Steel in its results.

In individual stocks, the top gainer was HCL Tech up 7.43 per cent followed by Bajaj Auto 5.90 per cent and an identical 4.38 per cent for HDFC and TCS. The losers were led by Tata Steel down 6.03 per cent, Idea Cellular 3.46 per cent and Bank of Baroda 2.84 per cent.

The week ahead sees the last of the results for the quarter and year ending March 2015. Many of the PSUs would be reporting results and all the OMCs (Oil marketing companies) and ONGC would also be reporting results. With subsidy sharing cut out for OMCs and significantly reduced for ONGC there could be pleasant surprises in the performance.

ONGC earns more when the crude oil price is down and earns less when the same rises. Paradoxical as it may sound, it remains a fact because of the subsidy sharing formula in the country. The week would see May series futures expire on Thursday, May 28.

At current value of Nifty of 8,458.95 points, the same is higher by 277.46 points or 3.39 per cent compared to the expiry value of 8,181.50 points. This gives the bulls substantial comfort and turf to defend against the bears in the next four days.

The month so far has seen bears having the upper hand with sharp intra-day moves and good news getting discounted and markets giving up gains registered during the day.

Buying and selling
FIIs were small buyers of Rs 230 crores for the last week but were sellers so far in May of Rs 4,100 crores. Domestic institutions were buyers of Rs 916 crores for the last week and Rs 3,250 crores for the month. The fact that FIIs have stopped selling has also helped in reversing the negative sentiment.

Probably damage control on the “MAT” issue has helped. The Indian rupee slipped marginally by 2 paisa or 0.03 per cent to close at R 63.52 to the US dollar. The Dow Jones lost 40.58 points or 0.22 per cent to close at 18,232.02 points. In primary market news shares of PNC Infratech Ltd would list on Tuesday, May 26.

The issue was oversubscribed by QIBs but remained unsubscribed in the HNI and retail segments. The market has digested the results which by and large indicate that we are still on the recovery path and Corporate India still has a long way to go before the growth trajectory that is being talked about, with close to double digit growth, can happen.

A lot of facilitation work has been done and hopefully when the GST bill to be discussed in parliament in the monsoon session gets cleared, many more issues will be resolved.

The week ahead will see markets trying to gain from the foundation built over the previous week. With expiry there as well, there is likely to be increased volatility and sharp intra-day moves as well. After results the market will keenly await the first news of the monsoon hitting Kerala.

The news could drive the markets upward simply because there have been such conflicting reports about the monsoon, what with unseasonal rain in various parts of the country at periodic intervals. The present government will be completing its first year in office on May 26. The markets will be choppy but have an upward bias in the coming week. Selective buying is advocated.

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

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.

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