Time for number crunching
All eyes are on the inflation data to be released this week as these numbers will decide if the RBI Governor offers more rate cuts
The week gone by saw the markets make the best gains they have since the beginning of the current calendar year. BSESENSEX gained 764.71 points or 4.04 per cent to close at 19,683.23 points. The NIFTY gained 226 points or 3.95 per cent to close at 5,945.70 points. The broader market saw the BSE100, BSE200 and BSE500 gaining 3.85 per cent, 3.68 per cent and 3.56 per cent respectively.
The BSEREALTY was the biggest gainer up 7.40 per cent. The other gainers included BSEBANKEX up 5.57 per cent, BSECAP 5.33 per cent and BSEOIL up 4.37 per cent. There was just one loser with the BSECONSUMER down 1.86 per cent. In individual stocks, Sesa Goa was up 8.65 per cent, REC up 8.58 per cent, Sterlite Industries up 8.37 per cent and ICICI Bank up 7.86 per cent. On the losing side were Titan Industries down 5.70 per cent, Hind Unilever down 3.25 per cent and NTPC down 0.43 per cent.
This week will see the release of IIP and inflation numbers. These numbers become important as the RBI has its monetary policy meeting the following week, on March 19. The Street expects further rate cuts in this meeting. In case inflation does not come down significantly, the RBI Governor, who has gone on record stating that he is unhappy with the continued high inflation, may just reduce repo and reverse repo and keep interest rates unchanged.
The week saw global markets gaining with the Dow Jones hitting new lifetime highs while some of the European indices were at multi-year highs. Post clarification of the rules regarding TRC concerning Mauritius, markets in India bounced off crucial support levels and from an oversold level. FIIs bought shares worth Rs 3,053 crore while domestic institutions sold shares worth Rs 1,098 crore. The Indian Rupee gained 0.62 paisa or 1.13 per cent to close at 54.28 against the US dollar.
During the week, the government divested 12.5 per cent share in RCF to raise Rs 310 crore at a floor price of Rs 45. The issue was by and large bailed out by LIC and a number of financial institutions. Bids made at the floor price have received 65 per cent of the bid amount indicating this bailout. Shares from SAIL and NALCO would be divested in the coming weeks before the financial year comes to an end.
Repco Home Finance is tapping the capital markets with its issue to raise Rs 259-270 crore in a price band of Rs 165-172. The company is a subsidiary of Repco Bank which is a Government of India undertaking; it is owned by the Central government and the four Southern States. As the name suggests, the company is in the business of home finance and provides the same to all classes of customers primarily the small businessmen and non-salaried class.
The company does not provide finance to builders. The financials compare with those of LIC Housing Finance and Gruh Finance, which are both listed companies. Investors looking to invest in a housing finance company with a medium to long-term view may invest in the company. There are also a number of tax free bond issues open which offer retail investors upto 7.32 per cent for periods ranging from 10 years, 15 years and 20 years. These will close at the end of the coming week. These bond issues are from JNPT, Ennore Port, Dredging Corporation and HUDCO amongst others.
After having seen a huge run up in the previous week, the week ahead is likely to be one of consolidation. The previous week’s rally was more of a corrective rally and lacked the widespread participation considering the huge 4 per cent gain in the benchmark indices. The markets need to at least consolidate on these gains if nothing else. Global cues and the economic data due next week would dictate future movement of the
Key levels for the SENSEX are 19,350 and 19,950 while similar levels for the NIFTY are 5,825 and 6,025 respectively. The BSESENSEX has support at 19,538 points, then at 19,310 points, then at 19,060 points and finally at 18,885 points. It has resistance at 19,766 points, then at 19,902 points, then at 20,165 points and finally at 20,205 points. The NSENIFTY has support at 5,901 points, then at 5,831 points, then at 5,755 points and finally at 5,671 points. It has resistance at 5,971 points, then at 6,041 points, then at 6,083 points and finally at 6,111 points. Trade cautiously, with the financial year ending in a mere three weeks.
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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