The markets are indecisive and likely to test one's patience
The markets are indecisive and likely to test one's patience
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The markets were choppy and managed to close positive for the last week. The BSE SENSEX gained 110.38 points or 0.60 per cent to close at 18,376.48 points. 
The market evokes different moods and emotions from despair, to trepidation and sometimes, despairu00a0
The interesting fact is that the intra week high of 18.672.65 points was made on Friday. This means that the market has on the last trading day of last week, lost 296 points from the high to the close.
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The NSE NIFTY gained 40.65 points or 0.74 per cent to close at 5,516.75 points. The NIFTY also made its intra week high of 5,604.95 on Friday and lost 88 points on Friday.
Positive
The broader indices have all closed with positive gains. The BSE100, BSE200 and BSE500 gained 0.92 per cent, 1.01 per cent and 1.17 per cent respectively. The BSE MIDCAP and BSE SMALLCAP did much better and closed with bigger gains of 2.46 per cent and 1.59 per cent respectively. Hind Unilever was a big gainer for the week at 5.24 per cent. The big loser was Sun TV with losses of Rs 104.75 or 26.98 per cent, to close at Rs 283.45. The share lost on the apparent involvement of the present textile minister with a Malaysian company who acquired the stake in Aircel.
Nowhere
In IPO's, which were open during the previous week, Timbor Home Limited was subscribed an overall 5.78 times with the retail portion subscribed 14.22 times. The second issue VMS Industries Limited, did not receive a single bid from QIB's but managed to get subscription from HNI's and retail to be subscribed an overall 1.36 times. There are no new IPO issues this week and the lacklustre performance of the markets certainly has a role to play. The markets seem to be going nowhere. New issues seem to be either without fundamentals or are extremely overpriced making them unrewarding for applicants.
Conversion
SEBI has on Friday, June 3, changed the conversion rules for the only IDR (Indian Depository Receipt) listed namely Standard Chartered Bank. At the time of issue of these IDR's the document stated that the instrument could be converted into the underlying shares if the investor intended to sell the shares. This conversion was possible once the instruments were one year old.
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SEBI has now clarified that conversion would only be allowed if the trading volume in the IDR falls to 5 per cent or below of the issue size or outstanding instruments in a period of six months. This effectively means that the investor cannot convert these instruments and make any arbitrage opportunity, which may be there. This indeed is a body blow for investors and in the present form any further issue of IDR's is literally ruled out. It may be mentioned that these IDR's were listed on June 11, 2010 and were due for conversion on June 10, 2011 onwards.
Vulnerable
The markets have reversed from key resistance areas and are looking extremely vulnerable. For this vulnerability to be overcome, the BSE SENSEX needs to close above 18,750 points and the NSE NIFTY above 5,625 points. Its failure to do so could spell further weakness in the market.
The BSE SENSEX has support at 18,257 points, then at 18,155 points, then at 18,020 points, then at 17,816 points and finally at 17,686 points.
The SENSEX has resistance at 18,584 points, then at 18,672 points, then at 18,724 points, then at 18,910 points and finally at 19,106 points. The NSE NIFTY has support at 5,480 points, then at 5,449 points, then at 1,383 points, then at 5,328 points and finally at 5,302 points. It has resistance at 5,578 points, then at 5,594 points, then at 5,676 points, then at 5,706 points and finally at 5,791 points.
Indecisive
The week ahead is likely to see the markets weakening initially and then trying to recover some of the lost ground. The current market is in an indecisive period, where they have traded in a broad brand and done nothing significant in probably the last five months.
This period is likely to continue for some more time until the market is able to break out in either direction. Till this happens, the markets are likely to test one's patience.
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.
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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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