Spark of hope

The markets began trading on a positive note and had gained over one per cent in the first two days of the new fiscal year 201314 However a sharp reversal on Wednesday saw the markets lose ground and in the process the BSESENSEX closed negative for the week losing 38554 points or 205 per cent to close at 1845023 points Mukesh Ambani right and Anil Ambani signed a deal worth Rs 1200 crore that would allow Reliance Jio Infocomm the telecom division of Mukeshrsquos Reliance Industries to roll out 4G services using the nationwide optical fibre network operated by Anilrsquos Reliance Communications File pic The NIFTY lost 12930 points or 228 per cent to close at 555325 points The broader market saw the BSE100 BSE200 and BSE500 losing 192 per cent 171 per cent and 154 per cent respectively BSEMIDCAP was virtually flat gaining a tad at 004 per cent while BSESMALLCAP gained a whopping 189 per cent BSEHEALTH was the top gainer up 250 per cent Other gainers included BSEOIL up 108 per cent and BSEPSU up 044 per cent The losers were led by BSEFMCG down 330 per cent BSEMETAL down 274 per cent BSEAUTO down 253 per cent and BSEIT down 224 per cent In individual stocks Maruti Suzuki was the top gainer up 984 per cent followed by Indraprastha Gas up 938 per cent Hindustan Copper up 912 per cent and Cairn India up 612 per cent On the losing side were NMDC down 927 per cent United Spirits down 748 per cent and Bharti Tele down 725 per cent Politics Political uncertainty has crept into the market place It is widely believed that with the government having lost majority and now dependent on outside support of two political outfits from Uttar Pradesh the elections scheduled for May 2014 may be advanced by two quarters and held in OctoberNovember 2013 instead The second factor is that positive reforms necessary for the nationrsquos progress have taken a back seat while emphasis is being laid on damage control and preelection sops In such a scenario the markets have turned choppy and nervous Sugar has been decontrolled and the 10 per cent levy on sugar which was supplied at a fixed price of R19 per kilogram has been abolished This would benefit sugar mills in the medium to long term not necessarily from better profits but from substantially lower regulations This should help the industry to modernise FIIs who were the major driver for the markets have turned negative and for the first time since January 2013 have been sellers on every day of the week beginning April 1 2013 The net sales were Rs 825 crore with figures for April 1 not separately available as they have been clubbed with the figures for March 28 This negative figure is against the USD 4 billion purchase in January and February 2013 followed by USD 2 billion in March Domestic institutions were net buyers of Rs 70 crore The Indian Rupee depreciated Rs 052 or 096 per cent to close at 5480 against the USD Deal RCom and Reliance Industriesrsquo agreement concerning tower and network sharing for the roll out of 4G services from Reliance Jio was announced It is a winwin situation for both parties Reliance Industries would pay an upfront fee of Rs 1200 crore for the deal This would ensure better capacity utilisation for RCom while it would cut the time to set up the network and also the cost of the network for Reliance Data Several key events are expected to take place this week with Infosys kicking off the result season by declaring its fourth quarter and annual results for 201213 on Friday April 12 The week would also see the revelation of foreign trade data for February 2013 and IIP data Landmark The open offer from Diageo for shares of United Spirits opens on Wednesday April 10 at a price of R1440 The current price of the share is R1756 which is down Rs 142 or 748 per cent in the previous week The Bombay High Court had turned down any interim relief for Vijay Mallya from lenders to Kingfisher Airlines selling shares of United Spirits There are two broad issues involved in this open offer namely what action would the PSU consortium of banks take with regard to the personal guarantee of Mr Mallya given to them and secondly the private lenders who have shares as collateral Would these private banks and NBFCs tender shares at prices which are lower by almost 18 per cent in the open offer or be forced to sell in the market and give the balance surplus to the PSU consortium The action would be keenly watched as this is likely to be a landmark case Key levels for the SENSEX are 18250 and 18950 while similar levels for the NIFTY are 5465 and 5755 The BSESENSEX has support at 18384 points then at 18520 points then at 18045 points then at 17972 and finally at 17705 points It has resistance at 18956 points then at 18656 points then at 18877 points and finally at 19075 points The NSENIFTY has support at 5532 points then at 5490 points then at 5448 points and finally at 5366 points It has resistance at 5575 points then at 5618 points then at 5693 points and finally at 5748 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 httpak57in 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