Life below 5000 levels???

Going back to the last week’s article., this writer had mentioned that the markets are heavy and will see some downward movement. It was also mentioned that the Nifty Index is finding it difficult to keep its afloat above the magical figure of 5000.

Since the 1st day of the month, markets continued to be choppy. As compared to the Mayhem witnessed in the same month last year, this year it’s not been so serious. But the October month started with a choppy session. The bloody effect continued to hurt the markets. Major Indices corrected nearly 3% on week on week basis. Last week’s liquidity drove Nifty cross 5000 mark and helped Sensex to close 17 months high. FII remained buyers to the tune of US $ 4141 mn during Sep. FII Net bought equities worth US$ 12.5bn on YTD basis compared to a selling of US$ 9.2bn in the same period last year.

Stocks of OIL made its debut on the brousers. Stock closed up positive. This week it was the turn of the Pipavav Shipyard to get listed on the brousers. But as OIL, this IPO listing did not impress the investors. Pipavav which was issued at Rs 58, opened up strong made high of 64.70 in BSE, slipped down to make an intraday low of 53.85 levels. Pipavav after its debut listing closed at 56.80 below its issue price.

This writer had mentioned in the last week’s article that the Markets are trading at a PE of 23, which is at the higher side and we might see some correction. Major Indices closed in red on wow basis. Sensex closed at 16642 down by 2.9% wow basis and Nifty closed down by 2.7% below 4950 mark. Nifty closed at 4945. Small Cap Indices too had the bad week. Indices slipped 2.6%. Midcap Indices continued to enjoy its bubbly time. Midcap managed to keep itself afloat buy closing in green. Tech, Telecom & Motor stocks lead the carnage in the market. After the derating of the telecom sector, stocks had their bad time in the week. Bharti Airtel after the closure of the MTN merger talks corrected 21.4% in the week. Rcom corrected 22%, while Idea slipped down 15% in a week. Telecom stocks could correct some more.

In search or alternative currency of Dollar, forced the Dollar depreciate as compared to other currencies. Rupee made a fresh 13-month high this week. On one side strengthening of the Rupee value to US dollar is good news, but the export and the IT companies fell the other way round. Exporters finding it hard. Rupee had appreciated almost 5-7 % from the levels of 49.2 to almost 46.30 levels. IT stocks faced the heat of the depreciating value of the Dollar, as major revenues are from the export business. IT Index closed down 7.2%. HCL slipped down 12%, while TCS closed down by 11%. Wipro and Infosys closed down by 9.3% & 6.9% respectively. Maruti closed down by 10.7% and Tata Motors 6.5%. FMCG sector outperformed the other Indices by closing higher at 5.8%. HUL had a blast of its time, rallying by 9% while ITC surged 7.3%.Some of the Midcap and the Smallcap stocks that shuttered in the week are Shree Ashtavinayak which tanked nearly 30% in the week. Austral Coke continued its journey down closed down 22%. Alkali Metal too closed 22% down. IT stocks like Satyam, Mindtree & Geodesic slipped down in the range of 9-11%. While Jet airways surged 29%, IRB by 15% and EIH by 14.5%.
After 12 months, RIL announces bonus of 1:1 and a divided of Rs 13 a share. It may be announced to keep the investors invested in the stock on back of the ongoing tussle between the two Ambani brothers. The company is fighting a legal battle over the sale of gas to RNRL. The Supreme Court is schedule to start final hearings in the lawsuit on Oct 20th. RIL stock flared up almost 4% in the opening of the session. But corrected in the latter half of the trading session.
Infosys declared its second Quarterly results. The result was in line with the market expectations. Net sales grew by 3%. Company’s net profit grew by 8%. But the same could not impress the market. Stock closed down almost 1.5% down on the day of the announcement and closed down 6.9% on wow basis.

Trading screen turned red on the first day of the week after the recent pull back seen in the Indian markets to a multi month high. Indian markets swinged on the beats of the Global markets and the recent rally in the Indian equity market. Last weeks close appeared to continued to trend positive for some traders. But writer had informed that there will be correction in the India markets. The first day of the week opened with the bang. Sensex slipped nearly 270 points. Next day the markets slipped negative. Sensex made a low of 16622, but the buying in the late hours helped the Indices cover all its lost glory and the Indices closed in green. On Wednesday Sensex opened in green, but after the mid session slipped in the red territory. The Slipped continued for the rest if the week. Sensex closed down at 16642 down by 200 points of Friday. Nifty closed down 2.6% at 4942 levels well below the magical figure of 5000 levels.

Technically Nifty closed below the long term trendline no. 2. It was clear mentioned in the last article that the MACD indicator has registered a Negative Divergence on the daily chart. RSI had also broken down its long term support trendline. Nifty will continue to face resistance at 5013-5016-5046 levels. Nifty support is at 4905-4894-4856 levels.

FII’s which Net buyers were in the last week, turned out to be Net sellers in the current week. FII’s sold stocks worth Rs. 252 Cr. DII’s too remained sellers to the tune of Rs.970 Cr.