Sudden slump

The markets were weak on expected lines and fell sharply last Thursday and Friday to close the week with substantial losses The BESENSEX lost 64591 points or 247 per cent to close at 2548084 points while the Nifty lost 18785 points or 241 per cent to close at 760260 pointsUps and downsThe broader indices saw the BSE100 BSE200 and BSE500 losing 199 per cent 183 per cent and 180 per cent respectively The BSEMIDCAP lost 070 per cent while the BSESMALLCAP lost 146 per cent In sectors so widespread was the loss that there was just one gainer and that too marginal in BSEHEALTCARE which gained a mere 008 per cent The losers were led by BSECAPGOODS which lost a staggering 781 per cent followed by BSEOILampGAS down 301 per cent and BSEMETAL down 291 per centIn individual stocks Bharti Airtel gained 702 per cent followed by Hindustan Unilever at 483 per cent and Hindustan Petroleum up 467 per cent On the losing side were Larsen and Toubro down 1111 per cent Axis Bank 708 per cent and NTPC 551 per cent Other losers included momentum stocks Wockhardt down 1107 per cent and Financial Technologies 1391 per centThe market fell on expiry day on account of selling pressure yet closed the July futures with gains of 228 points or 304 per cent at 7704 Friday saw acrosstheboard selling on account of global cues which included the Russian sanctions Gaza conflict Argentina default and Portugal bank collapse The markets were looking tired and needed to correct which they have doneRupee weakensFIIs turned sellers last week and sold shares worth R 2750 crore They were net buyers in July of R 9350 crore and in the first seven months of the calendar year have bought shares worth R 71960 crore Domestic institutions which were sellers turned buyers of equity in the week of R 3700 crore while in the month of July they were buyers of R 5050 crore In the first seven months they were net sellers of R 1800 crore The Indian rupee turned weak and closed at R 6118 a loss of R 108 or 180 per centThe insurance bill proposing to increase FDI to 49 per cent from the present 26 per cent has been taken up for debate in the Rajya Sabha Readers would remember that it was proposed in the Budget cleared by the cabinet and is now being debated in Parliament all in the space of 20 daysComing up nextRBI meets on Tuesday for the policy review and in a week bereft of news triggers will be in focus The consensus is that policy rates will remain unchanged but with a softer bias signalling that there may be softening of rates going forward seeing the governmentrsquos intention to rein in inflation Also what will help will be the fact that the monsoon has certainly picked up and the El Nino effect has largely been contained or the risk mitigatedThe silver lining to the week could be if the governor decides to give a boost to the economy and makes a token cut signalling his willingness to accept the efforts from the government One must remember that core sector grew at 73 per cent in June its best ever in 9 months and this would augur well when IIP numbers are declared later in the monthThe correction which was more than welcome looks like continuing with the markets consolidating in the earlier part of the week before they resume their upward climb and target 27000 on the Sensex and 8000 on the Nifty The move could get a pleasant surprise and fillip if Raghuram Rajan the RBI governor decides to take the lead otherwise bide your time till the end of the week Use weakness to buy sharesArun 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 httpak57inDisclaimer 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