Sentiments stay nervous

Courtesy : Utvi News

The trading week gone by was witness to a virtual bloodbath across global capital markets. Given the heightened anxiety over the European crisis the sell-off that was witnessed during the week had caused the Nifty to fall below the 200 DMA.

Some respite came in on the penultimate day of the week, when the government announced the rise in the Administered Price Mechanism (APM). This helped stocks like ONGC and Oil India to bounce back sharply and also brought cheer at the counters of gas related state run PSU like BPCL, HPCL and GAIL.

On the back of healthy Q4 FY10 numbers and a robust FY11 guidance by the management the stock price of L&T displayed upward mobility. The share price of ICICI Bank however witnessed selling pressure following the announcement its acquisition of Bank of Rajasthan. Metal stock prices continued their descent on account of the erosion in base metal prices on the LME.

The week gone by saw the 3G auction come to an end with the government's kitty swelling by about Rs 67,000 crore. This should help the government to some extent in shaving the fiscal deficit for FY11. Although, the end of 3G auction relieved pressure on the telecom stocks, concerns of stretched balance sheets on account of huge payments and resultant debt led to the Telecom stocks being traded with caution.

Given the market volatility, none of the four IPO listings this week impressed investors. Barring Mandhana Industries, the stock prices of Tarapur Transformers, SJVNL and Jaypee Infratech closed below their issue price.

In the week gone by, the Nifty has broken its key support levels and has dropped below its 200 day moving average. This suggests that a rebound to recent index highs may take a while coming.

With the expiry of the F&O contracts for current month due in the week ahead, the markets may witness some squaring off which could help pare some of the losses.

Going forward, stock specific action could be witnessed given the impending announcement of results by large companies like Tata Steel, BHEL and the OMC’s BPCL and HPCL, which will be cautiously monitored.

The prices of gold may again commence an ascent if the European debt concerns fail to provide any respite to the capital markets world over.

Amidst all this confusion, IDR issues will debut in India next week, with Standard Chartered Bank set to be the first off the blocks.

Notwithstanding the late spurt at the end of trade in the week gone by, the sentiment still remains nervous. For now, the directional tone for the Indian markets would continue to be guided by global market events and resultant FII flows.

One would thus do well to bide time on the sidelines and take the plunge only after the dust clears.