Though the mood is exuberant, brace yourself, as we have turbulence ahead
Prime Minister Narendra Modi is being shown the way by Chinese President Xi Jinping during a meeting in Hangzhou, China yesterday. Pic/PTI
Markets gained on four of the five trading days last week, and made a new high for the calendar year. The correction, which was expected did not materialise and we saw a fresh breakout instead. The markets need to continue to gain ground if the momentum is to be sustained. The BSE SENSEX gained 749.86 points or 2.70 per cent to close at 28,532.11. NIFTY gained 237.10 points or 2.775 to close at 8,809.65 points. The broader market saw BSE100, BSE200 and BSE500 gain 2.40 per cent, 2.30 per cent and 2.24 per cent. BSEMIDCAP gained 1.78 per cent while BSESMALLCAP gained 1.26 per cent.
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About gains
In sectoral gainers, the top performer was BSE AUTO up 5.06 per cent followed by BSE BANKEX 3.63 per cent and BSE CAPGOODS 2.91 per cent. The losers were led by BSE REALTY down 1.73 per cent followed by BSE TECK 0.42 per cent. In individual stocks the top gainer was Tata Motors up 9.16 per cent followed by Hero Moto 7.90 per cent, ICICI Bank 6.56 per cent and HDFC 5.19 per cent. The losers were led by Bharti Tele 7.31 per cent and followed by Wipro 1.35 per cent and TCS 0.62 per cent.
The Indian Rupee gained 24 paisa or 0.36 per cent to close at Rs 66.82. Dow Jones gained 96.26 points or 0.52$ to close at 18,491.66 points.
Terrific Telecom
Reliance Jio announced a sharp cut in data charges and the same shook its listed competitors. Bharti Tele lost Rs 25.15 or 7.31 per cent to close at Rs 318.95, while Idea lost Rs 9.90 or 10.54 per cent to close at Rs 84.05. Reliance Industries itself was a minor loser down 1.46 per cent at Rs 1,013 on concerns of there being execution risk. Competition is always good for a consumer and things could never be better on the telecom front.
Shares of RBL Bank Limited listed on Wednesday, August 31 and had a great debut, gaining Rs 74.50, or over 33 per cent. The issue had received excellent response, and was oversubscribed 69.62 times overall with HNI portion subscribed 198 times. The cost of funding was Rs 42 which means all HNIs have made money. Things could not have been better for them and money making seems to have become easy. This is a worrying sign but one must enjoy the party as long as it lasts.
Who knows?
The US Fed needs to raise interest rates sooner than later, but whether it would bite the bullet is a difficult question. Secondly, with Presidential elections due in November, or a mere two months later, the FED may decide to hold for two months, before taking a call. The rise of interest rates would have some bearing on the easy liquidity, which global markets are currently seeing.
We will see two IPO bound companies organising roadshows in connection with their IPO’s. GNA Axles Limited and L&T Technologies Limited. While GNA Axles is the largest player in its segment, L&T Technologies even though it is in the niche technology space is part of a crowded IT market which is currently facing slowdown pressure. The poor performance of the recent L&T Infotech, which continues to trade below its issue price would add to the pressure on the new issue.
Caution advised
The market mood and sentiment has undergone a sea change in the last week, and is currently exuberant. While it would be out of place to suggest a correction in such a scenario, one needs to be cautious as the market is gaining ground without news flow. The one and only factor driving the market is liquidity. It is time to be cautious.
Keep your fingers crossed, hope for the best and play the market on a daily basis. We have a festival holiday today for the markets reducing it to a four day week. There is every possibility then, of an increase in volatility.
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 https://ak57.in
Disclaimer: No financial information 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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