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.
Last week, the markets witnessed huge daily movements, but ended the week on a net basis on a lackluster note. The BSE Sensex lost 335 points in the first two days of trading, then gained 299 points, lost 324 and ended the week with a gain of 277 points on the last day.
The Nifty lost 129 points in the first two days, gained 91 points, lost 99 points and finally gained 92 points. What does this indicate?
The market is not sure about the direction and the trend. It reacts in a volatile manner to just about anything. It is clearly awaiting direction or cues, which at this point seem unlikely. Infosys and TCS both reported their quarterly results during the week. Though the markets cheered the results of Infosys and the shares gained, TCS shares have fallen during the last week. The Satyam saga continues with things getting murkier.
The government has appointed members to the board of directors and trading in Satyam shares is increasing with the stock having huge volumes and now lower deliveries indicating a casino like approach with speculators ruling the roost.
Infosys results were a decent set of numbers considering the present environment, but not encouraging from the sector perspective or from an economy perspective. The company has also muted its guidance for the last quarter of the current year.
Had the rupee not depreciated by 11% during the quarter, the net profits in rupee terms would not have been what they were. In dollar terms, the performance is fairly muted and does not inspire a lot of confidence about at least the next two quarters, showing a strong recovery in North America, which accounts for 64% of revenue for Infosys.
All the world markets that we track were down this week, though the extent of fall varied. The new US President would be sworn in this weekend and the sanction of the balance bailout package helped the US markets recover some lost ground.
The Dow Jones lost 317.96 points or 3.70% to close at 8281.22 points while the Nasdaq lost 42.26 points or 2.69 % to close at 1529.33 points. Asian markets fell even sharply with Hang Seng losing 1121.93 points or 7.80% to close at 13255.51 points. Nikkei lost as much losing 606.65 points or 6.87% to close at 8230.15 points.
The BSE Sensex flip-flopped through the week, down on the first two days, and then alternated with up, down and up to finally close down 82.88 points or 0.88% to close at 9323.59 points.
The Nifty similarly flip-flopped and lost 44.55 points or 1.55% to close at 2828.45 points. The market being undecided in which direction it wants to go was also visible on the sectoral indices with some positive and some negative.
The strongest gainers were the BSE Oil and Gas, which gained 156.10 points or 2.70% to close at 5933.69 points and the BSE IT, which gained 52.99 points or 2.49% to close at 2184.98 points. The worst performing sectors were the BSE Realty which lost 140.33 points or 7.53% to close at 1723.76 points and the BSE Bankex, which lost 295.76 points or 5.5% to close at 5085.6 points.
Coming to the next week, I believe the market will continue to be directionless and there are no triggers, which can drive the market in any direction.
Major results due this week include all from the Reliance pack due on 22 and 23 of January and the markets could take some direction from these results. By and large, we will be range bound with a negative bias and FIIs continue to be sellers, the rupee continues to be weak, inflation is on a downward spiral, but nobody has the conviction to go out and buy.
The BSE Sensex has support at around the 9185 levels and then at 9040. The next support is at 8965 and then at 8825, with strong support at 8600. It has immediate resistance at 9402, then at 9510, then at 9610 and finally at 9975 just short of the 10K mark.
The NIFTY has support at 2756, then at 2725-2730 levels, then at 2645 and finally at 2600 levels. It has resistance at 2868, then at 2897, then at 2979 and finally at 3065 levels.
In conclusion, this week would be another indecisive week with no clear trend or direction being established. The weekend is going to be long with Republic day being celebrated on January 26 and Friday could see a sell off or sharp short covering depending on which way the markets move in during the previous four days.
My advice to investors is to just stay put and watch the results as they unfold. Very clearly there is no trend, no direction and no cues to anticipate. I believe there is downward bias, which will continue for the week.
SEBI disclaimer: I have no investments in any of the stocks referred above.
The writer invites comments at firstname.lastname@example.org