Patience is the key

Thursday saw the markets losing substantial ground and recovering the same on Friday. The markets closed fairly flat as far as the Sensex is concerned but the movement across indices was different. The Sensex lost 9.74 points or 0.05 per cent to close at 20,366.82 points. The Nifty lost 14.85 points or 0.24 per cent at 6,048.35 points.

Arvind Kejriwal's resignation as Delhi CM means uncertainty for markets and politics. Pic/AFP

The BSE100, BSE200 and BSE500 lost 0.50 per cent, 0.45 per cent and 0.49 per cent. The BSEMIDCAP lost 0.40 per cent while the BSESMALLCAP lost 0.78 per cent. The top sectoral gainer was BSECON DUR up 2.15 per cent followed by BSEIT up 2.12 per cent and BSEAUTO up 1.50 per cent. The losers were led by BSEPOWER down 2.79 per cent. The other losers included BSEMETAL down 2.58 per cent and BSEHEALTHCARE down 1.78 per cent.

Stocks
In individual stocks the biggest gainer was Tata Motors up 7.55 per cent followed by ICICI Bank up 2.70 per cent and ONGC up 2.43 per cent. The losers were led by Cipla down 10.49 per cent. Other losers included Hindalco down 5.97 per cent and Jet Airways down 5.43 per cent. Markets regulator SEBI seems to have issued a notice to Etihad on its takeover of Jet Airways and said that it believes the takeover code has been violated.

One is not sure whether this news will be enough to revive the fortunes of Jet Airways which reported yet another quarter of losses. FIIs were net sellers of R 249.80 crore for the week while domestic institutions were sellers of equities worth Rs 401.96 crore. The Indian rupee gained R 0.36 to close at R 61.92. Dow Jones had a strong performance on Friday and as a result gained 360.31 points or 2.28 per cent to close at 16,154.39 points for the week.

Mixed
Economic data released during the week was a mixed bag. While inflation led by food items showed further signs of cooling off with prices of fruits and vegetables easing, IIP for the third consecutive month was negative at -0.6 per cent.

This puts at rest the so-called green shoots that one was hearing a quarter away. The NPAs of banks have become worrisome and it is widely believed that the banking system has a total of Rs 3 lakh crore of stressed assets. The economy needs to improve significantly and banks need to mount extreme pressure to recover and closely monitor these accounts if the economy is to survive.

Politics
The Delhi CM Arvind Kejriwal has resigned in a mere 49 days. Whether this is a tactical move or blunder only time will tell, but politics has become interesting ever since the entry of the AAP party.

The FM presents a vote on account on Monday to Parliament and the talking point would be how he has stuck to the fiscal deficit of 4.8 per cent. Markets would be hoping and praying that the FM does not surprise everyone by announcing some last minute sops to influence voters in favour of his beleaguered party.

Cut in import duty on gold is certainly expected but that would have no impact. Similarly the surcharge on corporate income and individuals above a threshold limit known as the super-rich tax would automatically lapse after the year and would be withdrawn. Besides this there should not be any substantial tinkering as this is a vote on account.

The only other possibility is some reduction in excise duties to boost industrial activity. The markets will wait for these announcements and also the dissolution of the house before beginning yet another attempt to make a new high. I firmly believe that the markets are headed higher for the next couple of months and one needs to be patient in the market to make any meaningful money.

Caution
The week ahead would be driven by news flow mainly from Parliament and global cues. Key levels for the Sensex are 19,955 and 20,905 while they are 5,935 and 6,190 for the Nifty.

The support for the Sensex is at 20,203 points, then at 20,171 points, then at 19,970 points and finally at 19,804 points. It has resistance at 20,456 points, then at 20,539 points, then at 20,699 points and finally at 20,906 points.

The Nifty has support at 6,003 points, then at 5,986 points, then at 5,931 points and finally at 5,864 points. It has resistance at 6,074 points, then at 6,108 points, then at 6,140 points and finally at 6,230 points. Trade cautiously and keep an eye on any downward moves to make purchases.

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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