V stands for Volatile
Casting an eye on intra-day ebbs and flows
The markets were extremely volatile last week on an intra-day basis. They closed with gains, which were primarily accounted for on just one day -- Wednesday November 21. The BSE SENSEX gained 197.20 points or 1.08 per cent to close at 18,506.57 points while NSE NIFTY gained 52.55 points or 0.94 per cent to close at 5,626.60 points. The broader indices like the BSE100, BSE200 and BSE500 gained 0.71 per cent, 0.54 per cent and 0.39 per cent respectively while BSE MIDCAP and BSE SMALLCAP lost 0.91% and 0.75 per cent.
The top sectoral gainers were BSE FMCG up 2.57 per cent, BSE AUTO up 1.53 per cent, BSE BANKEX up 1.21 per cent and BSE IT up 1.13 per cent. The losers included BSE PSU down 1.23 per cent, BSE OIL down 0.98 per cent and BSE REALTY down 0.85 per cent. In individual stocks, Jet Airways gained 27.91 per cent, M&M up 6.71 per cent and United Spirits up 4.85 per cent. The losers included Hind Copper down 14.88 per cent, Hind Petro down 5.07 per cent and NTPC down 4.03 per cent.
The Indian rupee depreciated further to close at Rs 55.54 against Rs 55.18. FIIs were buyers of shares worth Rs 1,671 crore while domestic institutions were sellers of Rs 273 crore. Government divestment program finally kick started on Friday with the government finally able to sell 5.16 crore shares of Hindustan Copper at an average price of Rs 156.56 to raise about Rs 810 crore. The floor price was fixed at a 41 per cent discount to the previous day's closing price of Rs 266. State insurer LIC and PSU banks, SBI and PNB, bought the shares.
Other banks have also supported the issue and finally completed a divestment, the first for the current year. The share closed at down circuit of Rs 213 losing 20 per cent on Friday and would continue to be under pressure going forward as well. There was another offer for sale from Blue Dart on Friday, which sold 14.31 lakh shares at a floor price of Rs 1,720. The company received bids for 51.83 lakh shares at an average price of Rs 1833. The sale was to comply with SEBI's dictate of achieving minimum public shareholding of 24 per cent.
The contrast between the two OFS (offer for sale) of Hindustan Copper and Blue Dart is indeed an eye opener for one and all to see. The IPO from Tara Jewels Limited was subscribed 1.98 times. The company had raised Rs 179.5 crore through a fresh issue of Rs 109.5 crore and an offer for sale of Rs 70 crore. IT also did an anchor allocation at the upper end of the price band of Rs 230 to raise 26.66 crore. The successful completion of this IPO may be beneficial for other companies like CARE and Bharti Infratel looking to tap the capital markets.
The previous week saw the Dow Jones gain 3 per cent. Parliament began its winter session on Thursday and no constructive work has happened in the first two days. It appears that neither the ruling Congress nor the opposition is really interested in doing any constructive work. The MPs are quite happy with the logjam and not doing much or anything at all. Monday would see the Prime Minister, Manmohan Singh announcing a scheme under which direct transfer of funds would be made to the accounts of families under the "Aadhar" scheme. This would then eliminate subsidies given under fertiliser, food and petro products. The government hopes to win the elections with this scheme when the general elections are held in May 2014. The success of this scheme would depend on the successful implementation of the UID scheme Aadhar.
There is a midweek holiday on Wednesday followed by expiry of November futures on Thursday, November 29. The October series expired at a value of 5,705 and the current value is 80 points or 1.42 per cent lower. The current month has been quite subdued and has shown a downward tendency and there should not be much of short covering expected.
The week ahead would see a break in momentum due to the holiday. Trading would be driven largely by the happenings in Parliament as it is imperative to see that the reforms announced earlier become law. The Parliament logjam not getting resolved could be a dampener for the markets and see the markets weakening.
The BSE SENSEX has support at 18,420 points, then at 18,318 points, then at 18,245 points and finally at 18,135 points. It has resistance at 18,574 points, then at 18,630 points, then at 18,728 points and finally at 18,865 points. The NSE NIFTY has support at 5,600 points, then at 5,568 points, then at 5,535 points and finally at 5,473 points. It has resistance at 5,645 points, then at 5,673 points, then at 5,705 points and finally at 5,758 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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