Celebration time on board

Last week the markets were weak till Thursday and then it appears like we celebrated Diwali ahead of time on Friday Markets boomed as if there is no tomorrow on the back of some aggressive buying by FIIs Losses were erased and the SENSEX ended with net gains of 35430 points or 173 per cent at 2088289 points The NIFTY gained 9315 points or 153 per cent to close at 618935 points The broader indices like the BSE100 BSE200 and BSE500 gained less at 142 per cent 131 per cent and 120 per cent respectively The BSEMIDCAP gained a mere 042 per cent while the BSESMALLCAP gained 034 per centu00a0 FINANCIAL FILLIP The markets got a boost after the US Congress and Senate agreed to raise the debt for three months and allow the country to function The top gainer amongst sectoral indices was BSEMETAL up 343 per cent Other gainers included BSEOILampGAS up 341 per cent and BSEFMCG up 231 per cent There were a few small losers led by BSECAP GOODS down 052 per cent Other losers included BSEHEALTHCARE down 038 per cent and BSEAUTO down 024 per cent Gainers In individual stocks the biggest gainer was Sesa Sterlite up 66 per cent Others included Tata Steel up 673 per cent MCX up 1436 per cent and Reliance Industries 487 per cent The losers were led by PFC down 594 per cent Controversy ridden Wockhardt lost 1048 per cent while Canara Bank lost 535 per cent Indices Benchmark indices are at a three year high and if we rally for a few days more they could hit lifetime highs Unfortunately the good news ends with the broader indices at significantly lower levels The BSEMIDCAP is at around 5900 while the peak in January 2008 was 10300 Similarly the BSESMALLCAP is currently at 5750 while January 2008 levels were at 14200 The BSE500 is currently at 7500 levels while it was close to 9000 in January 2008 The point being made is that 30 stocks of the SENSEX and 50 stocks of the NIFTY paint a picture which is not representative of the entire or larger cross section of the market Even within the SENSEX ITC has played a dominant role moving from Rs 100 to Rs 350 and FMCG giant Hindustan Lever moving from 200 to 600 in the same period In IT Infosys has moved from 1500 to 3300 while TCS has moved from Rs 435 to Rs 2120 These were the gainers while some of the big losers have been Tata Steel down from Rs 715 to Rs 328 and Reliance Industries down from Rs 1240 to Rs 910 Caution One needs to be cautious at such times when fundamental news which is bad and at times scary are being completely ignored and markets are booming Actually itrsquos not markets itrsquos the benchmark indices The markets were given a boost by aggressive FII buying after the US Congress and senate agreed to raise debt for three months and allow the country to function This also means that the expected tapering of quantitative easing would not happen any time soon FIIs were buyers of equity of R 4476 crs while domestic institutions were sellers of Rs 1612 crs The Indian rupee weakened 20 paisa or 033 per cent to close at Rs 6127 Rise Inflation news was not good with both the WPI and CPI which is wholesale and consumer or retail inflation rising in September While WPI rose from 610 per cent to 646 per cent in September CPI rose from 952 per cent to 984 per cent This rise in inflation means that anticipated interest rate cuts will certainly not happen when RBI meets on the October 29 The World Bank has lowered its estimates of Indiarsquos GDP for the financial year 201314 to 47 per cent from the earlier 61 per cent Issue CBI has filed an FIR against Hindalco chairman KM Birla and the bureaucrat as part of the coal scam The ruling Congress party is worried about this issue as the fallout will affect industry and logically lead to an FIR to be filed also against the coal minister who happens to be the Prime Minister This issue will be in the news from now on and will have its ramifications as well Ahead The mood in the market is changing but it is time to become cautious The rally currently is too narrow to make one comfortable It has to become broader and more stocks need to participate Ride th rally in the initial part of the week followed by a correction Key levels for the SENSEX are 20410 and 21205 while they are 6055 and 6275 for the NIFTY The support for the SENSEX is at 20602 points then at 20528 points then at 20325 points then at 20175 points and finally at 20115 points It has resistance at 21047 points then at 21108 points then at 21345 points and finally at 21493 points The NIFTY has support at 6106 points then at 6073 points then at 5965 points and finally at 5911 points It has resistance at 6229 points then at 6288 points then at 6367 points and finally at 6418 points Arun Kejriwal is founder of the Mumbaibased advisory firm Kejriwal Research amp Investment Services Pvt Ltd Readers are invited to read more about these and other issues on his website httpak57inu00a0 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 risku00a0