Eye on FDI in multi-brand retail
The UPA government ‘managed’ to get the required support in the two houses of Parliament on the issue of FDI in multi brand retail. In the Lok Sabha, the SP and BSP walked out and abstained from voting, while in the Rajya Sabha, the SP walked out but BSP voted with the Govt. Having resolved this issue, there is expectation that the Govt. would be in a position to get the remaining bills in Parliament also cleared. The BSP statement that they would with the Govt. saw markets turn around and close in positive territory for the week.
The BSE SENSEX gained 84.20 points or 0.44 per cent to close at 19,424.10 points. The NIFTY gained 27.55 points or 0.47 per cent to close at 5,907.40 points. The broader indices like the BSE500, BSE200 and BSE100 gained more at 1.06 per cent, 0.98 per cent and 0.73 per cent respectively. The BSE MIDCAP gained a very healthy 2.44 per cent while the BSE SMALLCAP gained 2.34 per cent. Sectoral indices which gained included BSE REALTY up 5.18 per cent, BSE OIL up 3.13 per cent, BSEMETAL up 2.07 per cent and BSE BANKEX up 1.66 per cent. The loser was primarily BSE IT down 4.14 per cent.
In individual stocks, the top gainers were SBI up 6.5 per cent, Hindalco up 6.45 per cent, Reliance up 5.04 per cent, PNB up 4.45 per cent and BHEL up 4.09 per cent. Stocks from the IT space were big losers with Infosys down 4.8 per cent, Bharti Airtel down 4.35 per cent, TCS down 3.42 per cent and Wipro down 3.41 per cent. The buying momentum of FIIs increased last week with net purchases being Rs 5,135 crore while domestic institutions sold shares worth Rs 1,455 crore. For the year so far with three weeks to go FIIs have invested 1.1 lac crore while domestic institutions have sold Rs 16,700 crore worth of stock. The Indian Rupee depreciated by 0.21 paisa to close at Rs 54.47 to the US dollar.
With FDI out of the way focus will now shift to the remaining bills waiting to be discussed in the two houses of Parliament. The other key factor this week would be the market expectation about a rate cut when RBI meets for its review meet on Tuesday, December 18. The movement in the BSE BANKEX would be the key and would give indicators as to how the market would move during the week. The BSE BANKEX has been moving up sharply in recent times and was a gainer this week as well. Some of the key banks, which have moved include SBI, PNB, Canara Bank, Union Bank and ICICI Bank. Though the policy is next week action would happen this week and street expectations be built up as well.
The week ahead has three IPOs. The first is from ratings agency CARE which issue has opened on Friday and closes on Tuesday in a price band of Rs 700 to 750. The company would raise Rs 540 crore at the upper band and is reasonably priced to its listed peers CRISIL and ICRA. The second IPO is from Delhi based jewellery company PC Jeweller who is raising Rs 609 crore in a price band of Rs 125-135. The issue opens on Monday and closes on Wednesday. The issue is reasonably priced compared to last week listed Tara Jewels, which was subscribed 1.97 times and has not fared well in the two days since listing. The overhang from Tara not doing well at the secondary market would certainly impact the performance of PC Jeweller’s IPO. The third issue is from Bharti Infratel which is raising Rs 4,500 crore in a price band of Rs 210-240 with a discount of Rs 10 for retail investors. This issue would open on Tuesday and close for retail investors on Friday. This issue is expensive and retail investors looking for short term returns should avoid it. In the long run, it should be available at more affordable rates post listing.
The Govt has reduced the price of unsold spectrum by 30 per cent. It would be interesting to see post this reduction, how much spectrum is now sold. The week ahead is likely to be volatile on account of the expected RBI policy. As mentioned above, banks and the Bank Index would be a key to market movements. I believe that though the market would be volatile on an intraday basis, on a weekly basis it may lacklustre.
Key levels for the week ahead would be 19,600 and 19,150 on the SENSEX and 5,995 and 5,830 on thee NIFTY. Breaking of these levels are crucial otherwise markets would be range bound. The BSE SENSEX has support at 19,337 points, then at 19,219 points, then at 19,138 points and finally at 18,969 points. It has resistance at 19,525 points, then at 19,595 points, then at 19,725 points and finally at 19,970 points. The NSE NIFTY has support at 5,880 points, then at 5,847 points, then at 5,809 points and finally at 5,761 points. It has resistance at 5,941 points, then at 5,998 points, then at 6,032 points and finally at 6,069 points.