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.
The last week clearly brought out the nervousness in the markets and the fact that there is no clear trend or direction amongst investors. Markets are looking for cues and hope that somebody else will provide the same.
US investors felt that Obama, after being sworn in as President in front of an unprecedented 2.5 million people, would give the world the comfort that he would set things right. Unfortunately he spoke the truth and said that there were problems and things could actually worsen before improving.
This led to a sell off and markets around the world have closed in negative territory for the week. Our markets were generally weak and though they opened the week on a positive note and also rallied on Thursday, it was not enough to save the market from falling substantially.
The results season is in full swing before ending next week. Results from the banking sector have shown a strong performance and may make one believe that there is no slowdown in the economy. Reality is different with results from other sectors not being so, and visible signs of a slowing economy are there for all.
Reliance Industries reported a lower profit for the first time in twelve quarters, but the result was helped by a substantial other income and met street expectations. Reliance lost Rs 65 or 5.34% to close at Rs 1153. The Satyam saga continues and Larsen and Toubro has bought a whopping 5,09,19,964 shares or 5.09 crore shares or 7.56% of its equity on Friday.
It appears that not only Larsen is serious in acquiring or taking over Satyam's business, it has in the process also managed to average its acquisition price of Satyam's shares significantly lower. This helped Satyam shares gain Rs 9.25 or 31.25% at 38.85.
The world markets were down this week though the extent of fall varied for them. The Dow Jones lost 203.66 points or 2.46% to close at 8077.56 points, while the Nasdaq lost 52.04 points or 3.40 % to close at 1477.29 points. Asian markets fell more with Hang Seng losing 676.91 points or 5.11% to close at 12578.60 points. Nikkei lost a little more losing 484.90 points or 5.89% to close at 7745.25 points.
The BSE Sensex lost 649.24 points or 6.96% to close at 8674.35 points. This is a new weekly low closing and is lower than the week in which we hit the low of 2008 at 7697.
What is interesting is that in the previous week when the low was yet to be established, the weekly close of October 24, 2008, was 8701 and the weekly close of October 31 was 9788 after hitting an intra week low of 7697.39. This makes one believe that the worst is yet to come. The Nifty lost 149.90 points or 5.30% to close at 2678.55 points.
The signals become confusing as the Nifty has not yet broken this weekly low. The Nifty bottom for 2008 was 2252.75 and the close for the week of October 31 was 2885.60 points. The weekly close for October 24 was 2584 points. Technical analysis says that when the weekly level is broken there is a distinct possibility that the intra week value is likely to be tested if not broken. Keeping this in mind one should be cautious in the next few weeks.
All the sectoral indices lost ground and the average loss was in the region of 5% to 8%. The best performing indices were the BSE FMCG, which fell 43.60 points or 2.20% to close at 1936.73 points and the BSE Power, which fell 61.98 points or 3.51% to close at 1705.45 points.
The worst performing were the BSE Realty, which fell 210.13 points or 12.19% to close at 1513.63 points and the BSE Bankex, which lost 600.94 points or 11.82% to close at 4484.66 points.
Some of the big losers in the week were ICICI Bank down Rs 59.65 or 14.07% to close at Rs 364.30, SBI down Rs 124 or 10.64% at Rs 1042, DLF lost Rs 34.20 or 17.52% to close at Rs 161 and Tisco which lost Rs 37.80 or 18.52% to close at Rs 166.35.
Coming to the next week, I believe the market will continue to be driven by overseas cues and results. There are no major drivers, which can change the bearishness and the bearish mindset prevalent today. Almost all stock futures are trading at a discount to their underlying stocks and this indicates the present mood. There is a probability that the market may see short covering on Wednesday or Thursday on account of settlement expiry, otherwise there is hardly any action expected. Disclosures from promoters have started coming and they are being viewed negatively with their stock prices being hammered.
Last week saw the UB group shares being hammered. I believe we are very nervous and because there is no clarity whatsoever this situation is likely to continue for some more time.
The BSE Sensex has support at the 8584 levels and then at 8400 level. The next support is at 8222 and then at the physiological level of 8000. The low of 2008 acts as the last support at 7800 level, but that looks unlikely this week as we have just 4 trading days to go and Thursday also sees the expiration of the January futures.
The BSE Sensex has resistance at 8811, then at 9038 and then strong resistance at the 9200-9215 levels. If this is crossed, which seems unlikely, there is even stronger resistance at the 9400-9415 levels.
The Nifty has support at 2638, then at 2600 levels, then at 2534 and finally at 2395-2410 levels. It has resistance at 2742, then at 2810, then at 2846 and finally at 3017 levels.
In conclusion, this week would be another indecisive week with no clear trend or direction being established. There are no triggers, which can cause a sharp rally and from these levels we are looking for a rebound from low levels.
There are indications that the markets may fall further with a large number of results due in the next week from large, medium and small companies. My advice to you is to start analysing results over the long weekend and shortlist those companies in which you would like to invest in the near future. The time to invest whole-heartedly has not yet come though it is round the corner.
SEBI disclaimer: I have no investments in any of the stocks referred above.
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