Markets In Range-Bound Territory

It seems that the mood of the market is being bludgeoned by the happenings on the dollar front. Though various positive news flows came in during the last fortnight including mammoth gas findings by RIL, great numbers from the US economy and a fabulous performance by some of the Indian corporate bigwigs, these were not able to pump up the momentum of the markets much beyond the 20000 level. This was not how Dalal Street had expected the results season to fare.

Uncertainty around the dollar is so much that no one seems able to predict its course in the coming days. In fact, this seems to be the biggest worry for the bourses at this moment, and anything beyond Rs 57 to a dollar would pose a real concern for the market.

In the last fortnight, the BSE Sensex opened solid at 20167 points on May 16, and propelled by some positive cues, it shot up to 20443 points on May 20. Then, negative news flows from the US federal bank, the Japan market sell-off and poor output data from China spooked the markets, and the index shed 387 points in intraday trades on May 23. It dropped as low as 19568 on May 24, before closing at 20147 on May 29, thereby losing marginally by 20 points in the last 15 days.

In the same way, the NSE Nifty opened at 6128 and moved up to touch 6229 on May 20. However, it could not sustain these levels and tumbled to 5936 points on May 24, before closing at 6104 points on May 29, thereby losing 24 points.

Globally too, the last fortnight proved to be a churner or sorts for many of the indices. Though the US Dow showed extraordinary positivity to gain 0.89 per cent due to fabulous growth and business data, the mood of the other markets remained subdued. The Japanese Nikkei lost heavily to shed 5.51 per cent, followed by Singapore’s STI and Taiwan Weighted, which lost 1.31 per cent and 1.19 per cent respectively. On the other hand, China’s Shanghai Composite was the highest gainer, with a 3.09 per cent rise, followed by Brazil’s Bovespa (+1.99 per cent), Germany’s DAX (+1.59 per cent) and UK’s FTSE (+1.02 per cent).

During the fortnight, the robust purchasing by FIIs was the focal point. FIIs were net purchaser of shares worth of Rs 7584 crore. On the other hand, Indian MFs remained net sellers at Rs 1028 crore. On a daily basis the combined turnover of the BSE and NSE remained range-bound between Rs 11143 crore and Rs 17342 crore.

On the individual front, scrips that were up included ABB (+24.33 per cent), Britania Industries (+18.78 per cent), Adani Power (+17.55 per cent), Emami (+11.81 per cent) and Oracle Finance (+10.11 per cent). At the same time, Wockhardt, Ranbaxy lost heavily over shocks from US and Indian drug controllers and tumbled 32.55 per cent and 16.74 per cent respectively. Other losers include Divis Lab, HDIL and Unitech, which lost 12.89 per cent, 12.42 per cent and 11.95 per cent respectively.

Looking at the current phase of the market, it is very crucial that the GDP growth data shows some positivity. The RBI’s monetary policy would also have an impact on the markets. The bourses have already discounted an inevitable rate cut. Keeping these factors in mind, it is advisable for investors to book partial profits and watch out for good purchases on dips.