Share prices highly overbought: Tuesday Closing Report
Moneylife Digital Team 29 March 2011

The real test for the market will be after Thursday

The Sensex opened at 18,950, up seven points from its previous close and the Nifty resumed trade this morning unchanged at 5,687. The benchmarks touched the day's lows soon after the opening bell, but resumed their upward move on sustained institutional buying and easing crude prices, for the fourth day in a row. At the day's low, the Sensex fell to 18,945 and the Nifty was at 5,681.

We expect the uptrend to be halting from the current level, but the market has "turned buy on dips" as long as 17,800 on the Sensex and 5,350 on the Nifty are not breached. The real test of the market will be after Thursday, 31st March, when not only will the derivatives of the March series be settled, but the financial year will come to an end. There is an incentive to keep the prices up until then.

A sudden spike in the shares of DB Realty to Rs100.05 a piece, a gain of nearly 20% from its previous close of Rs83.40, propped up the realty sector in morning trade. The scrip had touched an all-time low of Rs81.40 yesterday, on news of the resignation of the company's director Sundaram Rajagopal. Mr Rajagopal is the fourth executive to leave the company amid the ongoing investigation into the company's involvement in the 2G spectrum allocation scam.

Two directors of the company, Asif Balwa and Rajiv Agarwal, were arrested by the Central Bureau of Investigation (CBI) today. Asif is the brother of Shahid Usman Balwa, the former managing director of DB Realty who is already in CBI custody. DB Realty closed the day up 19.66% at Rs99.80.

The market continued its northward journey on all-round buying support, extending the rally into the sixth day. The indices touched their day's highs in late trades with the Sensex at 19,226 and the Nifty at 5,770. However, the indices witnessed a marginal retracement from those levels to close in the green for the sixth consecutive day. The Sensex closed at 19,121, a gain of 178 points, and the Nifty settled 49 points higher at 5,736. The advance-decline ratio on the National Stock Exchange was negative at 752:1038.

The Sensex has added 1,282 points in this financial year-end rally that began on 22nd March and the Nifty has put on 372 points in the period.

Since July 1990, the Nifty has rallied for six consecutive days on 150 occasions (including the current rally). Of the previous 149 instances, the market has ended in the positive 78 times on the next seventh trading day, while it has been in the negative for 71 times on the next seventh day.

While the Sensex continued to make fresh highs, the broader indices settled in the red with the BSE Mid-cap index shedding 0.02% and the BSE Small-cap index declining 0.44%.

All sectoral gauges ended in positive territory with the BSE Auto index (up 1.70%) as the top gainer. BSE TECk (up 1.28%), BSE Metal (up 1.10%), BSE Consumer Durables and BSE IT (up 1.07%) followed the leader.

Reliance Communication (up 4.13%), Maruti Suzuki (up 3.61%), DLF (up 3.26%), Bharti Airtel (up 2.88%) and Tata Power (up 2.37%) were the toppers in the Sensex list. BHEL (down 1.48%) and ICICI Bank (down 0.03%) were the only two losers on the index.

Foreign direct investment (FDI) in India registered its second consecutive decline in February 2011, dipping by 30% year-on-year to $1.2 billion in the backdrop of the uncertain economic recovery in Europe. In February 2010, India attracted foreign direct investment (FDI) worth $1.7 billion. During the 11-month period from April 2010 to February 2011, FDI inflows into India declined by 25% to $18.3 billion.

Asian markets closed on a mixed note as global investment firm Goldman Sachs cut its forecast for Japan's economic growth. Profit booking in the Chinese market dragged the index lower. On the other hand, refiners and automakers aided the rise in the Korean market.

The Shanghai Composite was down 0.86%, the Hang Seng shed 0.03%, the Jakarta Composite declined 0.31%, the Nikkei 225 fell 0.21% and the Straits Times was almost unchanged, down 0.01%. On the other hand, the KLSE Composite gained 0.39%, the Seoul Composite surged 0.77% and the Taiwan Weighted advanced 0.51%.

Back home, foreign institutional investors were net buyers of equities worth Rs890.02 crore on Monday while domestic institutional investors were net sellers of stocks worth Rs286.52 crore.

Aban Offshore (up 0.15%), engaged in offshore drilling services, on Tuesday said its subsidiary Sinvest AS will sell its entire 50% stake in Venture Drilling AS to Norway's Petrolia ASA for $34 million (about Rs152 crore). After completion of the transaction, Sinvest's shareholding in Venture Drilling AS will become nil.

McNally Bharat Engineering Company (down 1.05%) has received an order from Neyveli Lignite Corporation for supply and maintenance of design, manufacture, fabrication, supply and assembly/erection, movement to mines, commissioning, testing and handing over of all mechanical, structural and electrical components of a 700 litre bucket wheel excavator for a total value of Rs115.56 crore. The scheduled time for completion of the order is 30 months.

Kajaria Ceramics (up 3.72%) has successfully completed the expansion programme of polished/glazed vitrified tiles at the existing location at Gailpur in Rajasthan with an annual capacity of 6 million square metres. Recently, the company completed the conversion of a part of its ceramic tile production facility into a vitrified line at Sikandrabad, in Uttar Pradesh.

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