28 March,2011 09:50 AM IST | | ARUN KEJRIWAL
The keyword is care, as after a roll, the market might see some wild swings this week
The markets were on a roll the week before this one. There was a small dip on the opening day but thereafter it was on a complete roll.
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As World Cup fever rages, all one can say is look at the markets as carefully as a batsman watches the ball. Here, Sri Lankan all rounder, Chamara Kapugedera delivers a ball during a training session in Colombo. Sri Lanka has made the semi-final.
The rise was so spectacular that it appeared to be Diwali time one week after Holi. The markets just shot through the roof and put in a sterling performance. The BSE SENSEX gained a staggering 936.83 points or 5.24 per cent to close at 18,815.64 points.
The NSE NIFTY gained 283.55 points or 5.28 per cent to close at 5654.25 points. The broader indices like the BSE 100, BSE 200 and BSE 500 chipped in with gains of 4.76 per cent, 4.56 per cent and 4.38 per cent.
The BSE MIDCAP gained 211.88 points or 3.25 per cent to close at 6,721.56 points while the BSE SMALLCAP gained 203.83 points or 2.61 per cent to close at 8,001.63 points.
Gainer
The BSE REALTY index, which has been under pressure for quite some time now, was a big gainer with a gain of 184.64 points or 8.99 per cent to close at 2,237.87 points. The BSE BANKEX gained 741.78 points or 6.09 per cent to close at 12,926.07 points.
Last week, saw one new listing in Lovable Lingerie Limited, which opened with a bang, but was under selling pressure thereafter. The issue was priced at Rs 205 and made a high of Rs 278.95 on the listing day and closed at Rs 250.75.
The other new listing was the bonds issue from SBI, which listed on Wednesday last. The Rs 10,000 face value bond with a coupon rate of 9.95 per cent closed trading for the week at Rs 10,373.79, a gain of 3.74 per cent.
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There has been an interest payment made on the application money and also the last fortnight of March period amounting to almost Rs 100 per bond.
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Taking both into account there is a yield of roughly 4.74 per cent, which investors have earned by investing in this scheme.
The return is excellent and considering that this instrument earns interest every day and is saleable on demand, allows the freedom of holding on to this instrument as long as the money is not needed for any other purpose.
Expiring
This week would see the futures for the March series expiring on the last day of the month, Thursday March 31. This week would also see some effort being made to prop up the Net Asset Value (NAV) of the mutual fund holdings.
Probably, this exercise may have happened to a great extent last week itself and caught people by complete surprise. If one were to make an attempt to rationalise the last week rise, there can be only two reasons attributed to the same.
The first and foremost reason has to be the fact that there was a great deal of short covering, which took place leading to the sharp rally.
The second reason is that world markets rallied led by Japan and this helped almost the entire world to gain. I believe that Indian markets reacted positively to both these events and posted one of their best weekly gains in more than 16 months.
Careful
Central Bank of India's rights issue has opened and the Bank is issuing shares in the ratio of three shares for every five shares held. The rights issue is being made at an attractive price of Rs 103 per share against the closing price of Rs 135.15.
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I would urge all shareholders of the bank to exercise their rights and subscribe to the same.u00a0
The week starting Monday, March 28, which is today, would be extremely choppy and volatile. We have seen an excellent rally, which seems difficult to sustain, as the fundamentals don't support such a strong rally. However, year-end considerations, end of March futures and NAV support exercise would make the markets see wild swings.
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There could be greater action in the mid-cap and small cap segments and one would need to be extremely careful during the week. Investors should use the wild movement in prices to book profits and re-enter at lower levels.
Arun Kejriwal is founder of the Mumbai-based advisory firm Kejriwal Research & Investment Services Pvt Ltd. Readers are invited to read more about these and other issues on his website https://ak57.in
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