He helps new promoters to tap the capital markets and also those who are keen
to learn the nuances of the market. Equipped with a commerce and law degree,
he has rich experience of over two decades in dealing with the markets.
Last week's trading was in different directions in the world markets and at
the Indian bourses. While the US and Asian markets fell, Indian markets rose.
The reason for the rise is probably expectations of a third incentive or impetus
package when the interim Budget will be presented on February 16.
The US markets posted big losses and the Dow Jones lost 430.18 points or 5.20
%, while the Nasdaq lost a little less, 57.35 points or 3.6 % to close at 1534.36
Asian markets also lost with the Hang Seng losing just 100.37 points or 0.74
% to close at 13554.67 points, with the Nikkei losing much more with a fall
of 297.22 points or 3.68 % to close at 7779.40 points.
The Sensex opened the week with a bang gaining 283 points on the first day itself.
The intra-week high made on Tuesday was 9724.87 points, a level, which even
Friday's gain could not surpass. The Sensex gained 333.88 points or 3.59 % to
close at 9634.74 points. The Nifty gained 105.25 points or 3.70 % to close at
The highlight of the week was the widespread gains that the broader indices
made. The BSE Midcap and the BSE Smallcap gained 4.51 % and 3.55% respectively.
In tune with the benchmark indices all the sectoral indices also gained ground
with the exception of the BSE IT and the BSE FMCG, which lost marginally losing
1.4% and 0.5% respectively.
The biggest gainer was the BSE Realty, which gained a staggering 177.55 points
or 12.55% to close at 1592.36 points and the BSE CG or capital goods, which
gained 478.32 points or 7.88 % to close at 6547.42 points. The top gainers in
the BSE Realty were DLF, which gained Rs 22.45 or 16.25% to close at Rs 160.60
and Unitech, which gained Rs 3.30, or 11.56% to close at Rs 31.85. L&T gained
Rs 62.30 or 9.75 % to close at Rs 701, while BHEL gained Rs 101 or 7.39 % to
close at Rs 1467. It may be mentioned here that L&T and BHEL together have
a weightage of 70% one this index.
The Railway Budget, announced on Friday, was in tune with the forthcoming elections
by being populist in nature. The minister announced a 2 % reduction in passenger
fares across all categories of travel in mail and express trains. Index of Industrial
Production numbers saw the growth rate turning negative for December.
What was particularly disturbing was the fact that the slowdown is broad based.
The manufacturing sector was the worst hit where out of seventeen industries
as many as ten have reported negative numbers.
The November number was also revised downwards from 2.4 % to 1.7 %. SEBI announced
some new guidelines regarding the takeover code. This doesn't seem to be new
set of laws, but seems to be a step in case specific pertaining to Satyam.
It is now to be seen how the Satyam board goes about inviting bids for Satyam.
In the US, the $787 billion package would have been sanctioned and become law
before our markets open on Monday morning, but it may be added that the Dow
Jones not only fell for the week but also lost ground on Friday.
Coming to the next week, it is likely to be volatile with serious attempt to
take out the physiological 10K and 3K mark in the two indices. The 13-day moving
average or DMA is likely to attempt to cut the 39 DMA from below in both the
Sensex and Nifty.
This crossover, if it happens, will be a positive one and could trigger a strong
rally. The best opportunity for it to happen is on Tuesday, if there are positive
triggers from the interim Budget or vote on account. FIIs have stopped their
aggressive selling and their net weekly purchase or sales have slowed down considerably.
It appears they also are waiting for the policies, which are being announced
prior to the elections, before taking any calls. They would like to act once
they are clear about the likely impact it would have on the markets.
The Sensex has support at the 9551 levels and then between 9395 and 9400 levels.
The next support is around the 9000-9005 levels and then finally at the low
of January 23 of 8631 levels. The BSE Sensex has resistance at 9725, which is
the previous week's high, then around the 9796-8000 level, then around the 10187-10195
levels and finally at the high of January 7 of 10469.
This week is likely to be volatile, hence the range for the support and resistance
has increased considerably over previous weeks. There is a possibility that
if nothing happens, post the interim Budget, many of these levels may not get
tested either side.
Nifty has support at 2906, then at 2870, then between 2830-2835 and finally
between 2739-2742. The Nifty has very strong support at the January 23 low of
2661. It has resistance at 2980, then at 2998-3000, then at 3050 and finally
at 3128. An important resistance would be the high of January 7 of 3147.
In conclusion, this week is likely to see the market attempting yet again to
break upwards of the physiological 10K on the Sensex and the 3K on the Nifty
This is probably its best chance to do so, as you have an interim Budget to
be tabled on Monday, the US bailout plan to become law tonight and the possibility
of a technical rally on account of the averages crossover is likely to happen.
If the markets do not break upwards on Monday, we could see yet another fall
happening during the week. Readers would be advised to see the effect of the
Budget and then play the markets. Clarity post this event is a certainty as
the buildup over the last two weeks is for this event.
More India business stories
SEBI disclaimer: I have no investments in any of the stocks referred above.
The writer invites comments at email@example.com