Not a care in the world

Sentiment is upbeat and the undercurrents strong

It was a great week at the bourses and it appeared that there are simply no concerns in the world. The market mood has turned upbeat and the undercurrent seems too strong for comfort. Foreign Institutional Investors (FII) did their bit and have pumped in a billion dollars in about six trading sessions.

The expiry of the June series did help as well and we saw short covering in the last hour as well. All of this saw the BSE SENSEX gaining 522.12 points or 2.86 per cent to close at 18,762.80 points. The NSE NIFTY gained 155.95 points or 2.85 per cent to close at 5,627.20 points.



The markets gained across the board and one saw almost all the sectors putting in good gains. The BSE100, BSE200 and BSE500 gained 2.85 per cent, 2.90 per cent and 2.96 per cent respectively. The BSE MIDCAP and BSE SMALLCAP gained more than the benchmark indices with gains of 3.45 per cent and 3.81 per cent respectively.

SBI was a big gainer and rose Rs 133 or 5.81 per cent to close at Rs 2,421. PFC or Power Finance gained Rs 13.35 or 7.49 per cent to close at Rs 1891.70.

It may be of interest to readers to know that the BSE FMCG is on an up trend from February 2011 and has gained 25 per cent since. It is at its lifetime high and has outperformed almost all indices currently. The BSE FMCG index closed at 4,048.44 points, a gain of 164.79 points or 4.24 per cent.

Pick up steam
There was an IPO, which had opened last week from Readymade Steel Limited. The issue was subscribed an overall 1.68 times thanks due to retail participation. The quality of the issue can be gauged from the fact that the QIB portion received subscription for a mere 62,580 equity shares or 0.03 times the QIB size.
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The other bond issue from Shriram Transport Finance Limited was oversubscribed on day one itself and there would be pro rata allotment to investors. There are no issues opening this week. The results season will start and will pick up steam from next week onwards.

The results of this quarter would be keenly watched to see if there are any signs of slow down or cost pressures, which everybody is worried about. These results will also see the effect of interest rate hikes, which have happened and also the resistance of the consumer to pay higher prices.

The number of bond issues tapping the markets is likely to go up keeping in mind the response that the issue from Shriram Transport received.

Secondly, the stock markets were down in the dumps some time ago but the last ten days have turned things around. One only hopes it wasn't a passing shower and stays on. However, the intensity of the rise makes one cautious and would like to wait and watch and see things unfolding.

To be watched
The BSE SENSEX on Friday, July 1, made an intra day high of 19,031.38 points and then slipped to close at 18,762.80 points. The intra day fall from the high to the close was 268 points and this is a significant point to be watched if the markets are to remain bullish in coming days and weeks.
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The NSE NIFTY similarly made a high of 5,705.80 points and fell 78.60 points to close at 5,627.20 points. From the low of June 20, the NSE NIFTY has intra day gained 509.90 points.
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The net gain has been 369.30 points. Similarly the BSE SENSEX has gained 1,717 points intra day and 1,256 points on closing basis. The rally seems to have run its course and one should not be surprised if we have a correction hereon.

The week starting today, July 4, (American Independence Day) is likely to see profit taking. The rally since the low has been swift and caught people by surprise. It needs to be sustained if we have cross-important resistances going ahead. The week is likely to see volatile movement with some correction and consolidation going ahead.

The BSE SENSEX has support at 18,640 points, then at 18,545 points, then at 18,321 points, then at 12,253 points and finally at 18,125 points. It has resistance at 18,958 points, 19,025 points, then at 19,151 points and finally at 19,276 points.

The NSE NIFTY has support at 5,589 points, then at 5,540 points, then at 5,493 points and finally at 5,355 points. It has resistance at 5,685 points, then at 5,743 points, then at 5,781 points and finally at 5,856 points.

The run up has been very fast and one needs to be cautious at this juncture. Allow the results to start coming before taking fresh positions.

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

Disclaimer: No financial information whatsoever published anywhere in this newspaper should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here isu00a0 for educational and information purposes only and under no circumstances should be used for actual trading or making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment or trading decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at his or her risk.

BSE SENSEX gained
522.12 points or 2.86 per cent to close at 18,762.80 points.

The NSE NIFTY gained
155.95 points or 2.85 per cent to close at 5,627.20 points.