Riding on hope

May 18, 2015, 02:21 IST | Arun Kejriwal

Dalal Street has mostly weathered the storm, the lows of May 7 could act as support in times to come

The markets have been choppy all through the last week and though the benchmark indices closed with small gains. There were sharper intraday moves every day. The volatility is a cause of concern for investors and traders alike and difficult to comprehend for people making money sitting in front of the trading screen.

ONE YEAR ON: Narendra Modi (r) will complete 365 days in office as the Indian Prime Minister on May 26. PIC/PTI
ONE YEAR ON: Narendra Modi (r) will complete 365 days in office as the Indian Prime Minister on May 26. Pic/PTI

Sensex gained 218.61 points or 0.81 per cent to close at 27,324 points while Nifty gained 70.85 points or 0.86 per cent to close at 8,262.35 points. Broader indices gained much more with BSE100, BSE200 and BSE500 up 1.11 per cent, 1.47 per cent and 1.43 per cent respectively. The BSEMIDCAP gained 3.20 per cent while BSESMALLCAP was up 1.96 per cent.

In sectoral indices, the gainers were led by BSEAUTO up 3.85 per cent followed by BSEBANKEX 2.57 per cent, BSEPSU 2.30 per cent and BSECONDUR 2.18 per cent. The losers were led by BSEREALTY down 3.03 per cent and followed by BSEMETAL 0.69 per cent and BSETECK 0.10 per cent.

In individual stocks, the top gainer was PSU bank Union Bank up 22.98 per cent followed by Gujarat Gas 16.43 per cent, Bank of Baroda 10.30 per cent, HeroMoto 9.82 per cent and SBI 9.76 per cent. The losers were led by DLF down 6.13 per cent followed by Hind Unilever 5.59 per cent and Lupin 4.91 per cent. Clearly, the gainers outweighed and outnumbered the losers which sense once does not get from the numbers.

Performance progress
The results season continues and it is a mixed bag with the under performers in a larger number than the out performers. In economic data, consumer and wholesale inflation fell for April. Index of Industrial Production (IIP) was down for April. Out trade deficit fell for April to 10.99 billion dollars against 11.79 billion dollars on the back of lower imports of gold.

What however is not good news is the fact that exports too fell to 22.05 billion against 23.95 billion dollars. We need our exporters to increase exports and take advantage of the depreciating rupee which is to make them more competitive in international markets.

In primary market news, the IPO from PNC Infratech was oversubscribed on the basis of response from institutional investors but the buckets of retail and HNI were undersubscribed. The IPO from UFO Moviez listed on Thursday and closed the last week at Rs 610.25 against the issue price of Rs 625, a loss of Rs 14.75 or 2.36 per cent. The setback that the two previous listings have had and the lacklustre support to the PNC infra issue from the non-institutional category will make future IPOs take stock of pricing before hitting the markets.

The Indian rupee gained 8 paisa or 0.13 per cent to close at Rs 63.50. Dow Jones closed at 28,272.56 points, a weekly gain of 81.44 points or 0.44 per cent. FIIs were sellers of Rs 790 crores during the week while Domestic institutions were buyers of Rs 900 crores provisional data showed. Clearly, the intensity of selling from FIIs has reduced over the weeks and especially after the announcement of a panel to look into tax issues was announced.

Year in power
Prime Minister Narendra Modi has completed a successful visit to China and the BJP-led NDA government will complete its first year in power at the centre, soon. Clearly, there has been marked improvement in the way business has been done.

This week would see results season peeking with the deadline for giving quarterly results expiring on May 30 for companies as the year ends on March 31. The progress of the monsoon which is expected to hit Kerala on May 30 would be tracked and the first anniversary of the government would be a review and pre-cursor to what to expect in the coming quarters.

The week for the markets would bring greater hopes as we seem to have weathered the storm and the lows of May 7 would act as a support in times to come. Markets are expected to gain from here and the possibility of sustained gains in the week is a possibility.

The choppiness witnessed in previous weeks is here to stay and should not act as a deterrent to those seeking to invest. Stay invested and look on dips to enter the market.

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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