Markets may see an upward swing, but do not indicate a sharp increase. The best strategy to follow is to let them Go up and SELL if the rise fails to sustain
Markets may see an upward swing, but do not indicate a sharp increase. The best strategy to follow is to let them Go up and SELL if the rise fails to sustain
The week ended on Friday, May 13 was a flat week. However, on Thursday the BSE Sensex lost about 250 points and gained 200 points on Friday. As a result of these two days of sharp movement, last week, the BSE Sensex closed with a gain of 12.47 points or 0.07 per cent to close at 18,531.28 points. The NSE Nifty lost 6.7 points or 0.12 per cent to close at 5,544.75 points. The BSE100, BSE200 and BSE500 were small gainers with 0.28 per cent, 0.34 per cent and 0.35 per cent. The BSE Midcap gained 0.57 per cent while the BSE Smallcap gained 0.31 per cent. In individual stocks the big gainer was Hindustan Unilever which gained a staggering Rs 31.75 or 11.56 per cent to close at Rs 306.45, on the back of strong topline growth and the margins not falling as much as was expected.
Elections
Results to the five state assemblies saw the ruling party losing in four of the five states. The petrol price hike has finally happened with a rise of Rs 5 per litre and the other petro products price rise being deferred once again. The price of petrol is substantially higher than what it was when crude prices had made their lifetime high of about $143. There would be yet another round of inflation increase with this rise as sooner or later prices of other petro products like diesel and LPG are also likely to go up.
Problems
There were four IPOs, which listed last week and the performance of all of them leaves a lot to be desired. Very clearly, the one problem in all the issues is the price and it appears that merchant bankers and promoters are not yet ready to give up their greed. The over pricing of these issues caused a sharp fall in price on the listing day and in the beginning of last week, causing loss to investors. The FPO from Power Finance Corporation was subscribed 4.34 times overall with the retail portion subscribed 2 times. The Qualified Institutional Buyer (QIB) portion was subscribed 6.92 times.
Price
There was an IPO from Aanjaneya Lifecare Limited, which 'managed' to get subscribed 1.11times. What is important in this issue is that the QIB response was very poor and the issue was subscribed by High Net Worth Individuals (HNIs) and retail. There is one new issue, this week from Galaxy Surfactants Limited. The issue closes on Thursday, May 19 and the price band is Rs 325-340. The company is in the business of manufacturing and marketing of surfactants and speciality chemicals in India for the Personal and home care industry. The products, business model and company are good but the asking price is expensive leaving nothing on the table for investors. It makes better sense to buy this share once it is listed and is available cheaper than the issue price.
Future
Foreign Institutional Investors (FIIs) continue with their negative bias in the market and have not bought on a net basis in the current month. Global markets are under pressure as well and the sharp fall in commodity prices is affecting the market. There seems to be a positive bias in the market this week, but the positive bias is not an indication of the markets gaining sharply. We must remember that in the beginning of May the markets had fallen between 3.25-3.45 per cent and the previous week could at best be labelled as a flat week where the sharp fall has been arrested.
The BSE Sensex has support at 18,299 points, then at 18,051 points, then at 17,849 points and finally at 17,469 points. It has resistance at 18,724 points, then at 18,930 points, then at 19,187 points and finally at 19,335 points. The NSE Nifty has support at 5,510 points, then at 5,476 points, then at 5,418 points and finally at 5,343 points. It has resistance at 5,609 points, then at 5,648 points, then at 5,710 points and finally at 5,741 points. The best strategy to follow in the week ahead is to allow the market to rise and look at selling or shorting if the rise fails to sustain. It appears that markets have an upward or positive bias but do not indicate a sharp rise.
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 isu00a0 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.
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