Flat Friday plays party pooper

The markets made an attempt to go up and the Sensex made a new closing high beating the one made on December 9, 2013, but a poor Friday wrecked everything. Global cues, a weak Dow and a currency meltdown saw the Sensex surrender a large part of the four days of gains made. The Sensex ended with a net gain of 69.94 points or 0.33 per cent at 21,133.56 points. The Nifty gained a tad at 5.10 points or 0.08 per cent to close at 6,266.75 points.

A man checks share prices in Tokyo on Monday, as Japan's share prices fell 3850.83 points to close at 15,005.73 points at the Tokyo Stock Exchange, following a sell-off on Wall Street and as the dollar sank against the yen on concerns over emerging economies. Pic/AFP

The broader indices like the BSE100, BSE200 and BSE500 lost 0.07 per cent, 0.11 per cent and 0.13 per cent respectively. The BSE MIDCAP lost 0.49 per cent while the BSE SMALLCAP lost 0.50 per cent. The top gainer amongst sectoral indices was BSEIT up 1.43 per cent. BSETECH gained 1.35 per cent. The losers were led by BSE PSU down 1.57 per cent. Other losers included BSEOILGAS down 1.47 per cent and BSE REALTY down 1.46 per cent.

Loser
In individual stocks, the biggest gainer was Wipro up 3.76 per cent. Others included Axis Bank up 3.61 per cent and Hindalco up 2.29 per cent. The losers were led by Axis Ranbaxy down 17.20 per cent. Others included REC down 6.87 per cent, Coal India down 5.44 per cent and Union Bank down 4.92 per cent. Ranbaxy has been hammered after the USFDA inspected and failed its fourth facility in India.

One really wonders what is going on in this company and one can understand that the erstwhile promoters may not have made some disclosures as is being talked but failing in inspection can be blamed only on the current management. The share has been a big loser over the last two weeks and has lost over 27 per cent in value.

Weak
Global markets were weak and lost considerable ground during the last two days. The Dow Jones Index has lost close to 500 points in the previous two days. The Dow Jones lost 579 points or 3.59 per cent to close at 15,879.11 points. FIIs were small buyers of equity of R 473.54 crore, while domestic institutions were sellers of R 553 crore. The rupee weakened and lost R 1.12 or 1.82 per cent to close at Rs 62.66.This week will once again be driven by what the Reserve Bank does in its review meet today.

Food and vegetable prices softened in December and this has helped inflation both consumer and wholesale to come down. This reduction will ensure that there are no changes in interest rates in the coming policy, but what would be important to note is the tone and tenor of the governor. The US Federal Reserve (Fed) meets today and tomorrow, and global markets will be awaiting further information on easing of the 85 billion bond buying which the Fed has been doing.

Trade
The current January series has seen markets trade in a fairly tight range of just about 220 points on the NIFTY. Friday's level of 6,266 is barely 13 points lower than the December close of 6,279 points. This series expires on Thursday, January 30 and a lot would depend on what the RBI governor says. Politics is keeping people on tenterhooks and the Delhi experiment of a new political order had many in the markets worried but slowly and steadily people are getting convinced a repeat of what happened in Delhi, is unlikely on a national basis.

Results
The markets are reasonably buoyant, and retail interest is still to step up. The easing of trading rules post modification of Periodic Call Auction (PCA) is happening but there are more sellers than buyers. Results from the giant companies have been largely in line with no pleasant or unpleasant surprises. Results will be crucial as we find more middle level companies declaring results. What one finds from results declared is that treasury management of companies has improved which has helped them earn better profits while margins are under pressure.

Busy
Markets, from today onwards would be determined by central bankers and Thursday would be expiry day. In short we have enough on our plates to keep the market and players busy. Key levels for the Sensex are 20,850 and 21,505 while they are 6,155 and 6,365 for the Nifty. The support for the Sensex is at 21,060 points, then at 20953 points, then at 20,850 points, then at 20,625 points and finally at 20,544 points.

It has resistance at 21,270 points, then at 21,361 points, then at 21,479 points, then at 21,565 points and finally at 21,770 points., The Nifty has support at 6,243points, then at 6,221 points, then at 6,175 points, then at 6,135 and finally at 6,109 points. It has resistance at 6,310 points, then at 6,333 points, then at 6,378 points, then at 6,415 points and finally at 6,446 points.

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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