Market’s momentum has broken, so enjoy the festival and return to trading a week later
The markets were caught unawares in the spat that has erupted between Cyrus Mistry and the Tata Sons board after the removal of Mistry from the chairmanship of Tata Sons, which is the holding company of the Tata Group.
The markets were directionless and ended with minor losses at the end of the week. They however continued to lose momentum. BSE Sensex lost 135.67 points or 0.48% to end at 27,941.51 points. Nifty lost 55.05 points or 0.63% to close at 8,638 points. The broader indices saw the BSE100, BSE200 and BSE500 lose 0.73%, 0.72% and 0.64% respectively. BSE Midcap lost 1.43% while BSE Smallcap eked out a small gain of 0.16%. The top sectoral gainer was BSE PSU at 1.15% followed by BSE Oil and Gas at 0.49% and BSE Healthcare at 0.20%. The top sectoral loser was BSE IT down 3.45% followed by BSE TECH 2.89% and BSE Capgoods 1.50%.
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In individual stocks, the top gainer was Dr Reddy’s at 8.08% followed by HDFC 3.81% and Coal India at 3.54%. The losers were led by HCL Tech, down 8.06% followed by Axis Bank 7.60% and Infosys 3.91%.
US markets on tenterhooks
The Indian Rupee gained 10 paisa or 0.15% to close at Rs 66.79. Dow Jones was virtually flat, gaining 15.48 points or 0.09% to close at 18,161.19 points. The US presidential polls would be held on Tuesday, November 8 and markets there would be on the tenterhooks predicting the outcome. In quite some time, this is one election where nobody wants to predict the outcome.
Trading for Samvat 2073 would have taken place yesterday Sunday October 30. Samvat 2072 has been good for the markets and saw BSE Sensex gain 2,198.25 points or 8.54%. Nifty gained 854.65 points or 10.98%. The real outperformers were BSE Midcap, which gained 2,719.41 points or 25.44%. BSE SMALLCAP gained 2,406.32 points or 21.78%. The outperformance of midcap and smallcap space is also the source for worry as this kind of difference is unsustainable. This is also the space where valuations have become obscene.
Issues in primary market
There were two issues in the primary market last week. The first was from PNB Housing Finance Limited, which raised Rs 3,000 crore from a fresh issue in the price band of Rs 750- 775. The QIB portion was subscribed 37.33 times, HNI 86.17 times and Retail 1.35 times. There were a total of 7.67 lakh applications, indicating the extent of interest in the issue.
The second issue was from Varun Beverages, which was subscribed just by QIB’s. The overall issue was subscribed 1.86 times with QIB portion subscribed 4.94 times. The other portions were undersubscribed with HNI 0.42, Retail 0.82 and Employee 0.05 times. Very clearly, the Indian public did not like the issue and therefore abstained from it. One does not remember any other issue receiving this kind of poor response in the current year.
The Mistry surprise
The markets were caught unawares in the spat that has erupted between Cyrus Mistry and the Tata Sons board after the removal of Mistry from the chairmanship of Tata Sons, which is the holding company of the Tata group. Events post the removal are clearly not in good taste and indicate an ugly spat brewing going forward. One hopes that the issue is resolved and does not become a case of washing dirty linen in public. Shares of Tata companies were under pressure for the first three days and showed some signs of recovery on Friday.
October series expired on a quiet note with Nifty surrendering almost all of the gains of the previous week. Nifty futures expired at 8,615.25 points, a gain of a mere 24 points or 0.28%.
No major turnaround
Results season have not showed any major signs of turnaround. There are a few companies that have reported good results but unfortunately, the same sector has not shown that. While automobiles — whether they are 2 or 4 wheelers — could be possibly the only exception.
The week ahead is a four-day trading week with Monday being a holiday for Diwali. The momentum has broken and one needs to consolidate at current levels before the next big upmove happens. Enjoy the festival and return to markets a week later.
Wishing all readers a Happy Diwali and a prosperous Samvat 2073.
Arun Kejriwal is founder of the Mumbai-based advisory firm Kejriwal Research & Investment Services Pvt Ltd.
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 is for educational and information purposes only.
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