While global markets were hit by the crisis in Japan, Indian markets remained largely unaffected

Japan had one of the worst tsunami and earthquakes that one is aware of in recent times. It hit the Japanese markets and also had a devastating effect on the world markets.


A man walks through a region ravaged by the tsunami in Japan

The large amount that the Japanese Central Bank has poured into the economy for reconstruction had a big effect on the Japanese Yen, which gained very sharply against the US Dollar in particular.

The G7 decided on a concerted effort and sold Japanese Yen, which weakened the currency to some extent. The Nikkei, which is the Japanese benchmark index after falling sharply for the first few days, recovered and is likely to continue its recovery going forward.

Expectations
Coming to our markets, contrary to expectations the markets actually gained on Monday and seesawed with losses and gains on every consecutive day. It is only on Friday that we again lost making it three losing days and two winning days. The volatility has been very high and we had more than one per cent gains or losses on every single day for the week. The BSE Sensex lost 295.28 points or 1.62 per cent to close at 17,878.81 points. The NSE Nifty lost 71.75 points or 1.32 per cent to close at 5,370.70 points. The broader indices like the BSE500, BSE200 and BSE100 lost 1.03 per cent, 1.13 per cent and 1.20 per cent respectively. The BSE smallcap lost 1.29 per cent but the BSE midcap performed much better and lost a mere 0.30 per cent. The credit policy announced by the Reserve Bank of India was in line with market expectations and the BSE Bankex closed virtually flat losing a mere 0.07 per cent.

Caution
There is one IPO opening on Tuesday in the coming week. Shilpi Cable Technologies Limited opens its issue on Tuesday and closes on Friday and would be raising Rs 55.87 crores in a price band of Rs 65-69. There is not much to talk about this company and therefore they have chosen not to have even a road show for the issue in Mumbai. Though the last three issues, which did not have fundamentals, are doing well in the market, one must resist the temptation of such issues. I believe people should simply avoid the issue. SBI had issued bonds in the last week of February 2011 and the allotment of these bonds has been completed. These bonds are likely to list in the current week and retail investors who have applied for the same would make good returns in the issue.

Volatile
The week ahead would continue to see extreme volatility as has become the norm. The BSE Sensex has support at 17,732, then at 17,664, then at 17,469, then at 17,322 and finally at 17,295 points. It has resistance at 18,142, then at 18,278, then at 18,463, and finally at 18,583 points. The NSE Nifty has support at 5,314, then at 5,232, then at 5,206 and finally at 5,143 points. The resistance is at 5,435, then at 5,485, then at 5,537 then at 5,565 and finally at 5,656 points.

Positive
It appears the markets are likely to be fairly range bound on a net basis for the week and would not move much on a net basis. It however appears that the markets are likely to end the week on a small positive note and the banking sector looks attractive. Readers would recall that the government of India is pumping in money into the equity of public sector banks and helping them to become stronger in terms of their capital adequacy norms. In conclusion a more sedate week with banking stocks and the mid cap sector likely to be positive during the week. I believe that the fall in volumes and Foreign Institutional Investors (FIIs)turning net sellers once again will keep the pressure on the markets.

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 http://ak57.in

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Ripple effect