Exceeding expectations

Friday seems to be the day of wonders at Dalal Street as huge gains were seen last week, on that day once again

Falling crude prices provided a big boost to the markets and they gained handsomely last Friday when trading for a new series began. The gains saw the BSESENSEX gain 359.36 points or 1.27 per cent in the week to close at 28,334.63 points.

Raghuram Rajan could be the man of the moment as the RBI is set to conduct a review in the week. Pic/Abhishek Rane
Raghuram Rajan could be the man of the moment as the RBI is set to conduct a review in the week. Pic/Abhishek Rane

The NSENIFTY gained 110.90 points or 1.31 per cent to close at 8,644.37. The broader market saw the BSE100, BSE200 and BE500 gain 1.17 per cent, 1.10 per cent and 0.98 per cent, respectively. The BSEMIDCAP gained 0.73 per cent while the BSESMALLCAP lost 0.49 per cent.

The top sectoral gainer was BSEIT up 2.60 per cent followed by BSEBANKEX 2.56 per cent and BSEPSU 2.04 per cent. BSEREALTY gained a significant 3.56 per cent on DLF gaining. There was just one sectoral loser in BSEFMCG down 1.27 per cent led by ITC after the government said it would ban the sale of loose cigarettes.

Stock watch
In individual stocks, the top gainer was BHEL up 12.05 per cent followed by Hind Petro up 11.72 per cent. Other stocks saw Jet Airways gain 23.34 per cent after a significant fall in crude prices while Gujarat Gas gained 14.27 per cent. Among the losers, the biggest fall was in Bharti Airtel down 4.69 per cent and then NMDC down 4.35 per cent. ITC fell 3.52 per cent.

The markets are on a roll led by falling crude prices which saw Brent crude fall below $70 for the first time in four years. The rupee weakened and closed at Rs 62.02, down 26 paisa or 0.42 per cent. FII’s continued their buying and were net purchaser of Rs 3,640 crores while domestic institutions were buyers of Rs 968 crores.

July-September 2014 GDP was at 5.3 per cent against 5.7 per cent in the first quarter of 14-15. This was however better than 5.2 per cent in the corresponding quarter of 13-14. For the first half of 14-15 GDP is at 5.5 per cent against 4.9 per cent, last year. The markets are in a mood to take high risks and are unwilling to go down on reality.

Momentum and feel good factor coupled with liquidity seem to be fuelling the market. If one is willing to take high risks to be part of the momentum, ride it but remember that high risk and high reward go hand in hand.

SEBI order
SEBI has issued an order against all the merchant bankers who were part of the IPO of CARE. They have been fined the maximum of Rs 1 crore for non-disclosure. It is indeed strange how consistently inconsistent SEBI is in issuing orders. A month ago in a similar case of non-disclosure they took action on the promoters and its key officials and allowed the merchant bankers to go scot-free.

Such inconsistent orders from the regulator tarnish its image and raise doubts about it being non-partisan. November futures expired peacefully and bulls held on to their gains of the earlier weeks. The Nifty expired at 8,494.20 points a gain of 325 points or 3.98 per cent. During the entire series they were in full command and at no point did it appear that things could go out of control.

RBI meets for its monetary policy review meet on Tuesday, December 2. Prior to the meeting the Finance Minister would be calling on the RBI governor to impress on him why rates need to be cut. Whether the rates will be cut or not will only be known at noon on Tuesday. The same not materialising is likely to bring about a sharp reaction and one should be prepared for a volatile trading.

There is an IPO opening on Wednesday and closing on Friday from the house of Oswal of Ludhiana. The issue Monte Carlo is into readymade garments and woollen wear. While the issue price would be priced at the top end of the band of Rs 645, investors should apply for one lot of 23 shares only as the issue would be oversubscribed. It may make sense to apply for listing gains as the issue is likely to receive overwhelming support.

It will be a volatile week with RBI credit policy due and D-street expecting the moon. Trade cautiously and remember that markets are made on expectations. Just because the governor has not obliged the D-street does not mean that all is lost or all is made. Enjoy the markets, as they ride to yet another high this week.

Arun Kejriwal is founder of the Mumbai-based advisory firm Kejriwal Research & Investment Services Pvt Ltd. Readers are invited to read more about these and other issues on his website http://ak57.in

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 and under no circumstances should be used for actual trading or making investment decisions.

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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