What should one expect in Samvat 2068?

Published: 27 October, 2011 07:24 IST | Arun Kejriwal |

Analysis of the Muhurat trading yesterday and forecasting the financial future

Analysis of the Muhurat trading yesterday and forecasting the financial future

Samvat 2067, which ended on Tuesday, was a year, which people in the stock market would like to forget. The year, which began on November 5, 2010, saw the BSE SENSEX lose 3,750.10 points or 17.85 per cent to close at 17,254.86 points.
The NSE NIFTY lost 1,120.85 points or 17.75 per cent to close at 5191.60 points. The expectations from SAMVAT 2068 are much more than what happened last year and it is generally believed that the year may not start off on a great note, but would end much better.

Actor Mahima Chaudhary signals the start of the
Muhurat session yesterday

SAMVAT 2068 saw the BSE SENSEX trade in a narrower range than what we saw last year. The total range was a mere 77 points between the high and the low. The high of the day was 17,350.49 while the low was 17,273.52.

The BSE SENSEX closed Muhurat trading with a symbolic gain of 33.97 points to close at 17288.83 points. The NSE NIFTY range last year was 35.40 points, while the same was 23.10 points this year. The high was 5,219.25 points while the low was 5,196.15 points. The NIFTY gained 10.20 points to close at 5,201.80 points.

Currently, one sees huge volatility in the markets and there are quite a few concerns in the country and the world, which seem to be affecting the markets. Locally rising interest rates, rise in commodity price, inflation and a slowdown in the economy.

To make matters worse, depreciating rupee and a government,which is stuck in numerous scams. On the global front, Europe is a major concern with Greece, Portugal, Italy and Spain at risk. Efforts are on to resolve the issue, but it needs large amount of money and without that, there cannot be a solution.

The Stock Exchange Building is all lit up

The US economy too is facing problems. There seems to be no growth in the US. This coupled with unemployment, which is running very high, is a serious problem for the US. Fiscal deficit too is at a record high and generally the economy is on a down slide.

What should one expect in SAMVAT 2068? Results for the quarter ended September 2011 seem to be below expectation and it has been a very challenging period for corporates.

Things are unlikely to improve significantly in the present quarter and one can hope that the fourth quarter ending March 2012, would be better than what is happening currently.

There could be some downward revision in earnings estimate once the quarter results are fully declared. This could be a cause, not for concern, but could affect the sentiment and keep investors away.

Secondly, the results , which have come from PSU banks are likely to be affected as they have all mandatorily moved to system driven monitoring of accounts and NPAs (Non-Performing Assets) have increased significantly in the agricultural segment.

Chopda poojan at Swaminarayan Temple in Dadar yesterday

This concern coupled with the recent downgrade of SBI rating, would keep this sector in the red and is likely to lose ground with the declaration of results for the quarter.

With the scene a little murky what should investors do is a common question and concern. I believe post results declaration in mid-November one would get plenty of opportunities to invest in the market.

One would have to be cautious and patient before investing. Challenging times are ahead of us and the key to success in investing would be patience. One must invest in companies, which have a proven track record and have consistently delivered over time.

It makes no sense in investing in the primary market as the number of fundamentally poor issues coming to the market has increased dramatically. One should wait for the divestment issues from the Government of India to come for any primary market investment.

I believe markets will improve when the calendar year changes and expectations from the Union Budget 2012-13 start doing the rounds. In conclusion, I would suggest that investors be patient and wait for things to unfold before jumping the gun. Wishing you all a happy Diwali and a very prosperous New Year.     

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.

Readers must consult a qualified financial advisor prior to making any actual investment or trading decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at his or her risk.

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