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BSE Sensex: Invest cautiously in this quiet week

July 2012 has been quite range-bound and with very little action other than in the first fortnight, when we touched a high of 5,350 on the Nifty. The market is in a make-or-break situation.

Arun Kejriwal        Last Updated: July 25, 2012  | 15:48 IST

Arun KejriwalJuly series futures will expire on Thursday. The previous series in June expired at a level of 5,149 against the previous week's close of 5,205 points.

July 2012 has been quite range-bound and with very little action other than in the first fortnight, when we touched a high of 5,350 on the Nifty. The market is in a make-or-break situation.

The most probable outcome of the week will be yet another week of listless movement with volumes dropping further in the cash market.

The management of Maruti Suzuki India has declared a lockout at the troubled Manesar plant in Gurgaon and the issue has now turned political.

Narendra Modi, chief minister, Gujarat will meet the Suzuki management in Japan while his Haryana counterpart will meet the managing director in New Delhi.

The government has cleared the proposal of hiving of the surplus land of Tata Communications into a separate company. The 773 hectare of surplus land is valued at roughly Rs 7,000 crore, or Rs 245 per share on a gross basis and just under Rs 200 if one were to deduct tax on the same on a per share basis.

The result season has begun already and it has been a mixed bag. Reliance Industries reported 21-per cent drop in net profit in the first quarter but it was marginally better than street expectations.

Other major companies that will announce results this week are HUL, L&T, Cairn India, Sesa Goa, Jindal Steel & Power, Power Grid, HCL Tech, ITC, Bhel, Sterlite Industries, ACC, Ambuja Cements, ICICI Bank, NTPC, PNB, Maruti Suzuki India and HDFC.

Foreign institutional investors continued to be buyers with purchases of just under Rs 1,700 crore for the last week while domestic institutions were net sellers to the extent of Rs 354 crore.

The market virtually drifted losing a tad at 0.32 per cent on the Sensex and 0.42 per cent on the Nifty.

Banking stocks were under pressure on the last day of the trading week on account of new measures announced by the Reserve Bank of India on restructuring. This is likely to put the sector under pressure this week as well.

Key reforms have been held up because of the presidential election, and it seems nothing major will be announced with differing statements coming from two allies of the United Progressive Alliance (UPA) - Nationalist Congress Party (NCP) and Trinamool Congress.

The market is keenly watching the monsoon season too. So far, monsoon has been 22 per cent deficient. With the economy already sluggish, further deficiency in monsoon will hit agricultural output.

The last week saw the listing of VKS Projects, which raised Rs 55 crore at a price of Rs 55 per share. The share closed virtually unchanged at the issue price after three days of trading.

Shriram Transport Finance is launching a bond issue to raise Rs 600 crore from July 26. The bond issue offers two tenures of three and five years with a coupon rate of 10.2 per cent and 10.5 per cent, respectively.

The issue also offers an incentive of 0.90 per cent for individual holders holding bonds on the record date for payment of interest. Investors looking for fixed returns may opt for the issue.

In conclusion, it will be a quiet week ahead with stock-specific action and based on results announced by companies.

Trade cautiously.

(The writer is an investment analyst)

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