All eyes on Tuesday, as interest rate cut issue calls for attention

Mar 21, 2016, 07:55 IST | Arun Kejriwal

Markets saw a volatile week gone by, and if it were not for a super Friday rally, markets would have been negative for the week. The BSE SENSEX gained 234.75 points or 0.95 per cent to close at 24,952.74 points. The NSE INDEX gained 94.15 points or 1.25 per cent to close at 7,604.35 points. Incidentally, the rise on Friday was 275 points on the SENSEX and 92 points on the NIFTY. The above illustrates that but for Friday, markets were flat to marginally negative. The broader indices saw the BSE100, BSE200 and BSE500 rise 1.08 per cent, 1.04 per cent and 0.98 per cent respectively, while BSE MIDCAP rose 0.29 per cent and BSE SMALLCAP 0.30 per cent.

It is a short trading window, as Holi comes up this week. Exercise caution so as not to end up in the red. Pic/PTI
It is a short trading window, as Holi comes up this week. Exercise caution so as not to end up in the red. Pic/PTI

The sectoral gainers were led by BSE BANKEX up 3.5 per cent followed by BSE IT 3.22 per cent and BSE TECH 2.74 per cent . The losers were led by BSE HEALTHCARE down 4.52 per cent followed by BSECON DUR 2.92 per cent and BSE METAL 0.52 per cent . In individual stocks the top gainer was BHEL up 9.36 per cent followed by ICICI Bank 7.74 per cent and SBI 5.93 per cent . In other stocks the top gainer was GAIL at 16.86 per cent followed by Tech Mahindra 7.61 per cent . On the losing side were Lupin Labs down 16.09 per cent, followed by Sun Pharma 5.99 per cent and HDFC 2.67 per cent.

No stopping bull run
FIIs continue to remain bullish and have been buying since the beginning of March, on all days except one, when they were sellers of a very small amount. The Dow Jones had a decent week, gaining 389.07 points to close at 17,602.38 points. This happened even though the Fed decided not to raise rates at their meeting held on Tuesday and Wednesday, last week. What is worrisome is that the US economy is not growing as expected. In the shorter term, rates not being raised was a positive. The Indian rupee strengthened 54 paisa or 0.81 per cent to close at Rs 66.50.

There is one issue from Bharat Wire Ropes currently on. The company is seeking to raise Rs 70 crore in a price band of Rs 40-45, for setting up a new 66,000 tons integrated wire and wire ropes manufacturing facility at Chalisgaon Maharashtra. The issue closes on Tuesday, March 22.

The second issue is from Infibeam Incorporation Limited which is in the e-tailing business. It would be the first company of its kind to be listed and would give people an idea of valuations of this sector. Infibeam is looking to raise Rs 450 crore, in a price band of Rs 360-432. The company is an integrated E-commerce business model with large merchant and customer base.

The issue from HCG closed on Friday and was subscribed 1.56 times. The company runs 14 oncology centres and had raised money for setting up 12 more centres. The primary markets are showing early signs of revival and pricing would continue to be the key.

The time is short
The week has a trading holiday on Thursday, March 24, for Holi. This would affect volumes on Friday which would then become an extended holiday. It would be by and large a three day week with positions being reduced on Wednesday midway, because of the long weekend.

Markets have had a good run up since budget and the current March series of NIFTY is up 539.60 points or 7.74 per cent . This gives bulls an upper hand and an opportunity to force short covering by bears at will. Surrendering some gains is likely but domination may continue.

The first part of the budget session of Parliament ended with high dram on the passing of AADHAA" bill. The Rajya Sabha recommended five changes, which were rejected by the Lok Sabha and passed. There is bitter acrimony between the ruling party and the opposition. we will know how this affects GST in the second part of the budget session.

It is dividend time on Dalal Street and companies are declaring them left, right and centre. It appears that 2016-17 may actually find companies skipping dividends, or, becoming miserly in their declaration. PSU companies are also declaring dividends, and, many of them are declaring their second interim dividend in a span of less than 15-30 days. PSU companies typically based on their expected earnings performance declare an interim dividend in February each year, and then top up the same with a final dividend when they announce their annual results for the year. This year, the customary interim was announced as scheduled but an unexpected second dividend is being announced courtesy the change in the budget of additional tax being paid by the recipient in case the dividend in the year so received exceeds Rs 10 lakhs.

Markets will continue to be choppy. The focus is on RBI governor for an interest rate cut on Tuesday, April 5. There is always a possibility that he may also do the same outside the policy earlier, and remove speculation about his action. Trade cautiously. Happy Holi to all readers.

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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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