Markets are looking vulnerable and are likely to dip this week
Markets are looking vulnerable and are likely to dip this week
The week gone by was shortened by two interspersed holidays on Tuesday and Thursday, yet there was enough action as if it was a normal week. We had a huge rally on Wednesday, which saw the Sensex gaining a staggering 434 points , while the Nifty gained 126 points. There were no reasons either on the global front or on the domestic front, which warranted such a rally. Foreign Institutional Investors' (FII) figures also were a paltry Rs 25 crore provisional and Rs 203 crore final, which failed to justify the movement. 
Market watch: An Indian stockbroker watches a pair of monitors at
a brokerage house in Mumbai. Pics/AFP
Infy
Last Friday, Infosys declared its results and the market did not respond well. Infosys fell by Rs 317 or 9.59 per cent in just one day and could be held responsible for bringing the markets down. The fact that Mohandas Pai would be quitting the company in June, further added to the downfall.u00a0 Nobody would remember that there was a short covering rally on Wednesday, which made the market vulnerable to hammering, but Infosys was the talking point.
Score
The week ended with the BSE Sensex losing a mere 64.63 points or 0.33 per cent. The NSE Nifty lost 7.45 points or 0.13 per cent. The broader indices lost a little more with the BSE500 losing 0.14 per cent, the BSE200 losing 0.23 per cent and the BSE100 losing 0.31 per cent. The BSE Midcap and the BSE Smallcap both ended with gains of 0.5 per cent and 0.41 per cent. The BSE Realty lost 2.19 per cent while the BSEIT lost a staggering 299.41 points or 4.57 per cent.u00a0 Infosys lost 7.12 per cent for the week while ITC gained Rs 7.30 to close at Rs 191.40.
IPOs
On the Initial Public Offering (IPO) front, Muthoot Finance is tapping the capital markets with its IPO in a price band of Rs 160-175. The company has allotted shares to 15 anchor investors at Rs 170 per share. The company has also issued a corrigendum in the newspapers on Wednesday where they have admitted that some 91 cases have been filed against them which do not appear in the Red Herring Prospectus(RHP). The sheer number of cases, which have been omitted cast aspersions on the transparency of the company going public.
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This is not the standard of corporate governance one expects from such a big company having leading merchant bankers. The company would be raising between Rs 824 crore and Rs 901 crore. The issue is huge and being the leader in loan against gold has its own charm. The next two competitors in the business are public sector banks and the differential in interest charged is huge. Public Sector Undertaking (PSU) banks charge 13 per cent while Muthoot charges between 20 and 22 per cent. Though there is a lot of hype, the current market scenario may not give much upside on listing. One should invest only if he is a long-term player.
Expectations
Coming to the markets, volatility and results based action will take place. The markets are looking vulnerable and are likely to dip in the current week. The BSE Sensex has support at 19,248 points, then at 19,079 points, then at 18,885 points and finally at 18,444 points. The level of 18,885-19010 is a very crucial level and if for any reason this were to break it could cause a sharp fall in the markets. For the markets to continue to remain bullish the Sensex must first break 19,811 and then close above it. The NSE Nifty has support at 5,784, then at 5,752 points, then at 5,683 and finally at 5,554 points.
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The level of 5680-5690 is a strong support and the breaking of this could bring about a sharp sell off. The Nifty has resistance at 5,885 points, then at 5,920 then at 5,986 and finally at 6,084. I believe there is a certain amount of weakness, which has set in, and the markets need to correct themselves. The key driver will continue to be the results from corporates and in global markets, it would be crude oil prices. Investors are advised to be cautious in buying and should look at results before venturing. I believe midcap and smallcap stocks will continue to outperform the benchmark indices.
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 https://ak57.in/u00a0
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 isu00a0 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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