Arun Kejriwal runs his own advisory firm, M/s Kejriwal Research and Investment Services Pvt Ltd. He advises HNIs, corporates and brokers on managing portfolios and investment opportunities.
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.
During the last week, Friday saw the announcement of yet another rate cut in CRR, repo and reverse repo by the RBI and a stimulus package being announced by Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission. These measures should see the markets opening strong next week, but there are resistances to be surmounted before we can say that the worst is over and that things will be better from here onwards.
Banking shares and fertiliser shares look good and should gain. There is also another story doing the rounds that Gujarat will remove the 30% of profits to be distributed to charitable purposes by state PSUs. This move is expected in the next few days and if it is to happen, it will be announced before the biennial event 'Vibrant Gujarat', which is scheduled to be held on January 12 and 13.
The markets this week seem to have done very well for themselves and there seems to be a common link with all of them gaining 6% and more, but less than 7%.
The Dow Jones gained 519.14 points or 6.10% to close at 9034.69 points, while the Nasdaq gained 101.97 points or 6.66% to close at 1632.21 points. Asian markets also gained strongly with Hang Seng gaining 858.67 points or 6.05% to close at 15042.81 points. Nikkei traded only on Monday and Tuesday before going on vacation for its New Year holidays and gained 120.04 points or 1.37% to close at 8859.56 points.
The BSE Sensex gained 629.30 points or 6.75% to close at 9958.22 points, just short of the physiological 10k mark. The Nifty gained 189.50 points or 6.63% to close at 3046.75 points. Sectoral indices all ended in the positive territory with the bulk of them gaining between 6% and 9%.
The top gainers were the BSE Metal and the BSE Realty index, which gained an identical 12.34%. The lowest gain was witnessed in the BSE FMCG, which gained a mere 1.38%. By and large, the market has almost made up everything that was lost last week, but has yet to make higher levels than the previous week.
I have had some interesting mails from readers on my picks over the last few days. My picks are based on technicals, but they are fundamentally strong and would make money even if they fail for that week.
This week I have two trading buys from the fertilizer segment - Coromandel fertilizer and GNFC. Coromandel Fertilisers is currently quoting at Rs 95.80. Our stop loss is Rs 90.50 and the target price is Rs 112, then Rs 118 and finally Rs 124. The second pick is on the basis of favorable announcement from the Gujarat government. Buy GNFC currently at Rs 59.40 for a target of Rs 69.25 and then at Rs 72.50 with a stop loss of Rs 56.25.
The government stimulus package is aiming at providing ample liquidity and enabling corporates to access the ECB route for the same. Reduction in CRR and repo rates will bring about a reduction in interest rates in the future and help in lowering financial costs for industry and trade.
It would also help the liquidity in the system to improve and force banks to lend, as it makes no sense with the current repo rates to lend to RBI or other banks. It will take some time for the fruits of this to be seen, but it is a concerted effort from the government to take some positive measures.
I believe the real challenge for the market this week would be to hold on to the early gains till the end of the week. Results starting of from the following week or January 12 onward are likely to add to the market pressure and it would be important from the short term prospect to see that the markets don't start slipping. One should see an all round improvement in the markets this week.
The Sensex has support at around the 9855 levels, then around the 9650 level, then at 9390 levels and finally at 9150 levels. It has immediate resistance at 10065 levels, then at 10270-10300 levels and finally at 10570. If we are able to cross this level, we have strong resistance at the November 2008 high of 10945. On the Nifty, support exists at 3105-3020, then at 2960 and finally at 2880 levels. If this level breaks, we have very strong support at the 2650 levels. On the upside there is resistance at 3135-3140 levels, again at 3160-3165 levels, then at 3240 level and finally at 3300 levels.
Here's wishing all a happy and prosperous new year.
SEBI disclaimer: I have investments in the stocks recommended above.
The writer invites comments at firstname.lastname@example.org