Benchmark indices continued to rise and registered their fourth consecutive weekly gains. The difference this time was that the momentum seems to be giving way and the gains were the smallest. The BSESENSEX gained 222.93 points or 0.65% to close at 34,415.58 points. NIFTY was up 83.45 points or 0.79% to close at 10,564.05 points. Dow Jones while continuing to remain volatile was marginally up gaining 102.80 points or 0.42% to close at 24,462.94 points.
The week belonged to the metal and IT sectors. In the IT space, it was all about TCS. They reported excellent results and the share surged. The share price of TCS gained Rs 255.40 or 7.5% to close at Rs 3,406.40. The market cap of TCS is now just a shout away from the 100-billion-dollar mark and this would be the first Indian company to achieve this landmark. They were at 98.8 billion at the end of Friday. They would have probably crossed the mark at the previous week’s level of the rupee as the same has depreciated 92 paisa or 1.39% at Rs 66.12 to the dollar.
TCS trades at 26.78 times its trailing 12 months EPS of Rs 127.03. On a similar basis Infosys trades at 15.93 times its EPS of Rs 73.97. Very clearly the market leader is TCS and the difference between TCS and Infosys is stark. They seem to have lost the plot some years ago and need to do a lot to catch up with TCS.
There was no activity in the primary market and no issues are apparently planned for the immediate week or two. However, one recent listing of Mishra Dhatu Nigam Limited, a PSU enterprise caught the eye. The share was listed on the 4th of April and was issued at Rs 90. The response was decent being subscribed about 1.3 times. It had a quiet opening and hovered around the issue price. Last week the share gained a staggering Rs 59.75 or 53.78% to close at Rs 170.85. The share has gained almost 90% from its issue price and hit upper circuit a couple of times in the last week. This is unheard of government shares. What has caught the market’s fancy beats me.
The week ahead would see April futures expire on Thursday the 26th of April. The bulls have had an upper hand so far with the series having gained 450.35 points or 4.26%. While under normal circumstances one would say that the bulls would have dominance with four trading sessions to go, it seems that they are losing the momentum and it would not be surprising if they let go some of the gains registered so far. Derivative data suggests that FII’s are net short on the market and the put call ratio indicates that markets are overbought. For FII’s to be forced to cover their shorts in a hurry and make markets rise that much faster, we need news flow which currently seems to be missing. In case there is no positive news, bulls may be forced to liquidate and reduce their position rather than carry forward or roll over to the next series leading to the weakness.
Another sector to take a beating last week was the oil marketing companies where HPCL lost 11.66%, BPCL lost 9.08% and IOC lost 2.96%. The street believes that these companies are not able to pass on the full impact of the rise in crude prices and currency depreciation currently. There problems are compounded with Karnataka going to polls on 12th May. The results for the March quarter for these companies would not have any significant impact as the quarter would report inventory gains of a significant nature with crude prices having risen quite sharply.
Result season has begun and so far, there is something to cheer about. Its however a l0ong way to go and one would need to be patient to see the green shoots emerge. Take some money of the table and wait for better buying opportunities. They would be available faster than one could imagine.
