Markets to temper cup euphoria

While the whole country is still celebrating India's World Cup victory, the marketsu00a0 this week are likely to be volatile and much consolidation is expected ahead

The week gone by was action packed in more than one way. The markets continued to be positive and reached higher levels, in such a short time. In the Cricket World Cup, India went on to win the World Cup beating Sri Lanka in Mumbai.


India's cricket team captain Mahendra Singh Dhoni poses with the ICC Cricket World Cup trophy

The BSE Sensex gained 604.75 points or 3.21u00a0 per cent for the week to close at 19,420.39 points. In the last two weeks the BSE Sensex has gained over 1,500 points. The NSE Nifty gained 171.8 points or 3.04 per cent to close at 5,826.05 points.

The fortnightly gain for the Nifty has been over 450 points. At the end of the first quarter of the calendar year 2011, the indices continue to be in negative territory. We are still 1,000 points in the negative for the BSE Sensex and about 300 points in the Nifty.

Positive
The broader indices like the BSE500, BSE200 and BSE100 gained similar to the benchmark indices with gains of 3.25 per cent, 3.22 per cent and 3.22 per cent respectively. The BSE Smallcap gained 4.46 per cent while the BSE Midcap gained 3.89 per cent. The BSE Realty fared very well and gained 7.15 per cent. In terms of individual stock performances DB Realty gained a staggering 20.10 per cent while LIC Housing Finance gained 13.4 per cent.

Scandal
The Central Bureau of Investigation (CBI) filing its charge sheet in the 2G scam on Saturday. It has implicated the former telecom minister and the promoters of DB Realty, Unitech and also accepted the involvement of Reliance Communication by saying that they owned Swan Telecom, the entity that was rechristened as DB Etisalat. There is no doubt that these three companies would be in the thick of market action when trading commences for the week and their direction would be down.

Events
The shares of PTC India Financial Services listed last week, had a disastrous start. The shares were issued at Rs 28 and retail investors were given a discount of Rs 1 per share. The share closed trading for the week at Rs 24.10, a weekly loss of Rs 3.90 or 13.93 per cent. Last week also saw the March futures expiring and the Foreign Institutional Investors (FIIs) turned big buyers, particularly on 31 March, the last trading day, with net inflows of over Rs 3,000 crores. This appears to be a one off event rather than becoming a trend. It would be important to see whether foreign bullishness continues in the week ahead or not.

Future
The week ahead would be volatile and the upward bias of the last two weeks would now turn to caution and the trend would be more of consolidation. The BSE Sensex has support at 19,347 then at 19,167, then at 18,954 and finally at 18,612 points. It has resistance at 19,527, then at 19,708, then at 19,935, and finally at 20,325 points. The NSE Nifty has support at 5,804, then at 5,754, then at 5,686 and finally at 5,563 points.

The resistance is at 5,854, then at 5,903, then at 5,917 and finally at 6,021 points. The markets have recovered very sharply in the last two weeks. We have had a rally after the Ides of March and it appears the markets would look at the results for the March quarter and annual results.

There are cost pressures and margins are likely to reduce.u00a0 The guidance given by the leading IT Company Infosys post its results would be keenly awaited and would form some sort of trend for the markets going forward. World markets, foreign inflows and developments on the 2G scam would have a bearing on our markets going forward.

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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