Stock talk: Rousing Rally

The markets made a new intraday high of 22,620 on the SENSEX and 6,776 on the NIFTY. From these levels, we saw a sharp sell-off on Friday which saw markets give up weekly gains and close flat. What is however interesting and encouraging is that the rally is gaining momentum and becoming broader with the Midcap and Smallcap indices ending last week with handsome gains.

Indian cricketer Gautam Gambhir (C) along with Sonali Jaitley (R), the daughter of Bharatiya Janata Party (BJP) senior leader and candidate from Amritsar, Arun Jaitley, campaign in the constituency

The BSESENSEX gained 19.53 points or 0.09 per cent to close at 22,359.50 points. The NIFTY lost 1.55 points or 0.02 per cent at 6,694.35 points. The BSE100, BSE200 and BSE500 gained 0.41 per cent, 0.53 per cent and 0.74 per cent respectively. The Midcap gained 2.67 per cent while the Smallcap gained 3.80 per cent.

Aam Aadmi Party (AAP) candidate for the Amritsar parliamentary seat Daljit Singh (C) sits on a rickshaw as he heads to file his nomination papers at the deputy commissioner's office in Amritsar. Pics/AFP

The top sectoral gainer was BSEREALTY up 6.91 per cent followed by BSECONDUR up 5.76 per cent and BSEMETAL up 4.40 per cent. The losers were led by BSEFMCG down 2.14 per cent, BSEBANKEX down 1.53 per cent and BSECAPGOODS down 1.19 per cent.

Stocks
In individual stocks, the biggest gainer was Ranbaxy up Rs 95.50 or 26.23 per cent at Rs 459.55. Other gainers included Jindal Steel up 7 per cent, Titan Industries up 6.66 per cent and Hindalco up 5.60 per cent. The losers were led by BHEL down 7.70 per cent. Other losers included GAIL down 4.80 per cent and ITC down 3.87 per cent. Very clearly those sectors and stocks which led the rally are now correcting, while the rest of the markets play catch up.

Mainstay
FIIs have been big investors and are a mainstay of the current rally. They bought equities worth R 2,242 crore for last week and a massive R 22,351 crore for March. Domestic institutions were provisional sellers of Rs 1,925 crore for last week, while for March they have sold Rs 3.374 crore.

The provisional figures of domestic institutions include the activities of LIC, while the final figures exclude their activity. Invariably, the final domestic institutions figure reduces at the end of the week when the final figures are available. The Indian Rupee remained range bound but held quite steady and closed at Rs 60.08, a weekly loss of Rs 0.17 or 0.28 per cent.

Truncated
The week ahead has a trading holiday on Tuesday and an extended weekend with the following Monday also being a holiday. This shortened week of four trading sessions and an extended weekend will see traders keeping positions light at the end of the week.

With result season getting ready to kick-off for the quarter and year ending March, the focus would shift on performance. The markets have gained over the last four months and non-performers will be punished this time around while performers would be rewarded with higher prices.

Ugly
The heat is being turned on in elections and things are turning ugly with complaints and counter complains being lodged regularly. The first round of polling takes place this Monday. Some economic data would be released during the week.

The focus would be on the natural gas price dispute concerning Reliance which comes up for hearing in the Supreme Court this week. Though no final judgement is expected there could be some interim order as the company has no contract at which it can bill the current gas output.

Review
RR or Raghuram Rajan, the RBI Governor announced the first policy review meet for the year 2014-15 and kept key rates unchanged. Two names for new bank licenses were also announced after getting clearance from the Election Commission, Infra finance major IDFC and microfinance company Bandhan were the two successful aspirants who made the cut.

Global
In global news, Dow Jones closed at 16,412.71 points up 89.65 points or 0.55 per cent. The markets are trading at close to lifetime highs but seem to be consolidating at those levels. Results even in the US will be a key to further market movements.

Levels
Markets are likely to consolidate this week and there would not be too many swings or surprises during trading. Key levels for the SENSEX are 22,025 and 23,015 while they are 6,625 and 6,785 for the NIFTY. The support for the SENSEX is at 22,290 points, then at 22,201 points, then at 22,080 points, then at 21,975 points and finally at 21,835 points. It has resistance at 22,476 points, then at 22,568 points, then at 22,662 points and finally at 22,925 points.

The NIFTY has support at 6,672 points, then at 6,615 points, then at 6,586 points and finally at 6,531 points. It has resistance at 6,729 points, then at 6,785 points, then at 6,828 points and finally at 6,874 points. The key drivers would now be the performance of companies and one eye on the Indian elections and the other eye on global cues.

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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