All eyes on exit polls
The markets remained extremely weak in the last week, thanks
to the exit polls results. The players remained nervous as
the exit polls for the second phase of election indicated
prospects of hung parliament. The Sensex and Nifty shed 4.5%
and 5% respectively during the week. As expected, the markets
opened sharply lower on Tuesday as the investors were in a
hurry to exit long positions. Most of the damage was done
on Tuesday itself, as the Sensex lost a whopping 213 points.
Despite the continuous flow of good results barring HLL,
the focus was entirely shifted towards elections and the likely
government at the Centre. The PSU stocks were at the receiving
end because in case of hung parliament and a new government
at the center, the pace of reforms process would slow down.
Disinvestment of key PSUs like HPCL and BPCL would also be
hampered. Overall, the trend remained jittery as the markets
witnessed selling pressure at higher levels. The global markets
also remained weak during the week, which encouraged the bears
to dominate the week. The overall breadth of the market remained
negative. The advance to decline ratio was 26:177.
On the last two trading sessions, the commodity stocks were
hammered ruthlessly on the back of the news that the Chinese
economy is slowing down, which was leading to a lower demand
for the metals by the dragon, consequently leading to pressure
on metal prices. Steel and aluminium stocks saw heavy dose
of selling. In another development during the week, PSU banking
sector stocks received a huge drubbing on the back of the
news of the RBI tightening the dividend payout norms of banks,
capping it at 33.3%. Further, as per the new norms, only those
banks with net NPA levels of less than 3% and a risk-weighted
assets ratio of at least 11% in the previous two years, can
declare dividends.
Major Movers in the week
Among the Sensex stocks Cipla, Grasim, Ranbaxy and Bajaj
Auto were gainers, while Zee Telefilms, Hindalco, Tisco, HPCL
and L&T were losers.
Major BSE A group gainers during the week were Nicholas Piramal,
Crompton Greaves, Century Textile and Chambal Fertilsers,
while SCI, Jisco, GMDC, NALCO and Zee were the major losers.
Stock of the week
Tisco : Feeling the heat…
Among the frontline stocks, steel counters saw heavy erosion
in its value. During the week, Tisco’s market cap eroded
by 12.6%. The stock tanked from Rs409 to Rs358 on Friday.
The news that China is contemplating slowing down its economy
hampered the sentiments on the commodity counters. The anticipation
of lower demand for the metals by China would lead to pressure
on the steel prices. Tisco also denied the rumours of bonus
issue by the company. This also led to further pressure on
the counter.
Derivative Summary
- During the week gone by Nifty lost 5% and closed at 1796.10.
Futures closed at 1783.35.
- Following the derivative expiry, open interest went down
by 34% from Rs. 11571 cr. to Rs. 7683 cr. OI in futures,
calls and puts went down by 18%, 59% and 82% respectively.
In absolute terms Nifty has open interest worth Rs. 2044
cr. outstanding as on Friday. Among stocks TISCO leads the
pack with Rs. 627 cr. followed by Reliance with Rs. 567
cr. and Infosys with Rs. 356 cr.
- Market wide put call ratio based on volume has come down
from 0.34 to 0.28 week on week. For Nifty the same has come
down from 0.57 to 0.41 week on week. Market wide put call
ratio based on open interest has come down from 0.52 to
0.19. For Nifty the same has come down from 0.95 to 0.42.Implied
volatility of Nifty 1800 call and put was 20.8% and 32.3%
respectively. Previous day IVs were 22.7% and 30.8% respectively
for near strike options.
Outlook
The markets are likely to remain weak just before the third
phase of the election, which is on 5th May, Wednesday as the
markets does not uncertainty. The short-term direction of
the market would depend solely on the results of the exit
polls, which would start coming out on Wednesday itself. The
other major concern for the market is the heavy selling by
the FIIs in the last couple of days.
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