Wait 'n' see for the Rupee

Choppy times define future direction of markets

The market fell for the first four trading days of last week and there was a mild recovery on last Friday, which just about managed to break the trend. Whether this week would see further recovery or a fall happening again is not apparent as yet. The BSE SENSEX lost 581.79 points or 2.87 per cent to close at 19,704.33 points.

The NSE NIFTY lost 203.75 points or 3.29 per cent to close at 5,983.55 points. The broader indices lost similar with the BSE100, BSE200 and BSE500 losing 3.17 per cent, 3.24 per cent and 3.20 per cent respectively. The BSE MIDCAP lost 3.43 per cent while the BSE SMALLCAP lost 3.33 per cent.

Losers
The fall was across sectors and all sectors were losers except BSE IT, which eked out a gain of a mere 0.14 per cent. The BSE REALTY was the top loser down 11.54 per cent. The other losers included BSE CAP down 8.00 per cent, BSE PSU down 4.75 per cent and BSE HEALTH down 4.74 per cent. The top gainer in individual stocks was Coal India up 4.28 per cent. Other gainers included C-PVC pipe maker Astral Polytechnic, which gained 25.27 per cent post its results.

United Spirits was another gainer up 6.59 per cent. The losers were led by Ranbaxy, which was down 17.21 per cent, after Daichi made a statement that they were not aware of the issues with the US FDA when they acquired the company. Yet another pharma company, Wockhardt was down 31.59 per cent after some restrictions on exports from one of its plants. Other losers included SBI down 11.30 per cent, L&T down 10.23 per cent and BPCL down 8.23 per cent.

Cues
The markets fell on cues from Japan where the NIKKEI suffered a sharp more than 7 per cent fall last Thursday and some disappointing results from key companies. SBI reported a drop in the NPA's over the previous quarter but significantly higher than the previous year. L&T reported a drop in its EBITDA margin of 129 basis points to 10.5 per cent and a net profit growth of 10 per cent to Rs 4,910 crore, which was below expectation. The company announced a bonus of 50 per cent. The results, which are now being reported, are a mixed bag and as we proceed into this week would have a larger share of poor results than good ones.

Guidelines
The June deadline of meeting the minimum public shareholding is fast approaching and there are companies who need to sell shares worth over Rs 8,000 crore in the next couple of weeks, to achieve the same. This could bring pressure on some of these individual companies who try to achieve the compliance. Once this deadline is over in two months’ time, the PSU requirement of 10 per cent public holding would also come to an end. PSU companies like STC, MMTC and Hind Copper amongst others would have to see these guidelines being met.

Movement
This week sees the expiry of the Nifty May futures on Thursday, May 30. The May series began the month at a level of 5,916.30 points. The current close of Nifty is 1.14 per cent higher than the beginning, but with the month being very volatile. The high of the month was 6229.45 points made on May 20. The movement has been sharp and with fairly large open interest in the markets, the expiry is certainly going to be volatile.

FIIs were big buyers during last week with net purchases of Rs 5,325 crore, while domestic institutions were net sellers of Rs 2,163 crore. It may be of interest that FIIs were marginal sellers of just under Rs 230 crore on Friday. The Indian Rupee after crossing Rs 56 during last week settled at Rs 55.66, a net loss of 1.42 per cent.

Price
The IPO from Just Dial was oversubscribed about 11.6 times and 40 per cent of retail investors would get an allotment of 25 shares. The oversubscription would ensure that successful retail applicants would make decent money on their application amount. I believe that the share price is likely to trade higher than Rs 625-650 in the listing week and this would mean a neat profit of anywhere between Rs 130-155 per share for the successful retail applicant.

Rupee
This is a choppy week, what with expiry and the way the rupee is moving. The markets would be driven by the FIIs, direction of the rupee and global markets. With the result season on, individual companies would be affected by them as well. Key levels for the SENSEX are 19,450 and 20,050 while similar levels for the NIFTY are 5,850 and 6,105 respectively.

The BSE SENSEX has support at 19,570 points, then at 19,367 points, then at 19,275 points and finally at 19,060 points. It has resistance at 19,835 points, then at 19,985 points, then at 20,100 points and finally at 20,308 points The NSE NIFTY has support at 5,941 points, then at 5,865 points, then at 5,792 points and finally at 5,722 points. It has resistance at 6,020 points, then at 6,098 points, then at 6,163 points and finally at 6,243 points. Trade cautiously.

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 is 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.u00a0

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