Positive news boosts markets

The markets opened weak as expected but then began to rally and closed very strong on the back of encouraging news flow from within the country. The Sensex ended with net gains of 612.64 points or 3.08 percent at 20,528.59 points. The Nifty gained 188.92 points or 3.20 percent to close at 6,096.20 points. The broader indices like the BSE100, BSE200 and BSE500 gained less at 3.02 percent, 2.87 percent and 2.86 percent respectively. The BSEMIDCAP gained 2.44 percent while the BSESMALLCAP gained 2.75 percent. The top gainer amongst sectoral indices was BSEREALTY up 8.71 percent. Other gainers included BSEIT up 6.14 percent and BSECAP GOODS up 5.83 percent. There were just two losers in BSECON DUR down 0.62 percent and BSEMETAL down 0.13 percent.

u00a0Shutdown blues: Even though there is a major crisis brewing in the US, its markets have not fallen significantly. PIC/AFP

In individual stocks the biggest gainer was again Ranbaxy up 10.74 percent. Others included MCX up 10.81 percent, Tata Motors up 10.12 percent and Tech Mahindra up 10.76 percent. The losers were led by Coal India down 8.84 percent. Hindalco was down 3.10 percent. The previous week's big gainer Just Dial, after having a great run, closed with losses of 14.36 percent.

Boost
The trade data was better with exports having grown and imports declining. Imports declined on account of substantially lower imports of gold and crude oil. While gold saw huge restrictions on import which have since been removed, crude oil decline also indicates the decline in the economy. The resultant CAD (current account deficit) was lower and markets welcomed it. Friday saw Infosys declaring quarterly results which were largely on expected lines, however the company raised the lower level of revenue guidance in dollar terms from 6-10 percent to 9-10 percent. This saw the share price hit a 52 week high and close at R 3,274 up 8.59 percent. The strong share performance from Infosys helped the BSEIT and BSETECK record decent gains as well.

Rally
FIIs were buyers of equity of R 3,133 crore while domestic institutions were sellers of Rs 746 crore. The Indian rupee strengthened to close at Rs 61.07, a gain of 37 paisa or 0.6 percent. The US government crisis continues and without a resolution the government will default on the October 17. The stalemate between the Democrats and Republicans needs to be resolved before the state defaults. Surprisingly markets have taken this in their stride and the Dow rallied to close at 15,237 points, a gain of 165 points or 1.10 percent for the week. This helped world markets to rally as well.

Cyclone
Post market close on Friday the IIP numbers for August were declared but were disappointing at 0.6 percent against 2.7 percent in July. It's quite likely that markets would react to these numbers adversely on Monday. India's worst cyclonic storm Phailin hit the coast of Orissa and a portion of Andhra Pradesh on Saturday night. The storm had caused widespread damage which is yet to be assessed. The advance information and preparedness has ensured that loss to human life has been minimized.

Outlook
The week ahead has a trading holiday on Wednesday on account of Bakri Eid. Reliance Industries, TCS, Bajaj Auto and HDFC are the key results which would be declared during the week. Inflation numbers would also be declared on Monday and though the RBI review meet is a fortnight away these inflation numbers would have a bearing on interest rates.

The market in the week ahead would be news-driven on account of inflation and corporate results. Developments in the US would also affect our markets as they would have a bearing on world markets. The key fact to note is that even though there is a major crisis brewing in the US, their markets have not fallen significantly. It's therefore quite likely that on resolution of the crisis there may not be much of an upside. The old adage, buy the rumour sell the fact, should hold well here as well.

In an event-driven week, key levels for the Sensex are 20,135 and 20,750 while they are 5,980 and 6,175 for the Nifty. The support for the Sensex is at 20,411 points, then at 20,219 points, then at 19,921 points and finally at 19,755 points. It has resistance at 20,607 points, then at 20,739 points, then at 20,795 points and finally at 20,848 points., The Nifty has support at 6,059 points, then at 5,998 points, then at 5,912 points and finally at 5,825 points. It has resistance at 6,120 points, then at 6,145 points, then at 6,231 points and finally at 6,295 points.u00a0

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.inu00a0