No monkey business, please

After last week’s blood bath, the Chinese New Year that commenced recently, gives investors hope in the days ahead

There was blood on Dalal Street, and, we recorded the biggest weekly loss in some time. My premonition last week asking people to stay out the uncertain times would have helped them in cutting losses. While it appears there may be some recovery simply because we have lost so much, we are far from out of the woods.

People touch monkey statues for luck at Baiyunguan Temple during Lunar New Year celebrations in Beijing as the Year of the Monkey commenced in China on Wednesday. Pics/AFP
People touch monkey statues for luck at Baiyunguan Temple during Lunar New Year celebrations in Beijing as the Year of the Monkey commenced in China on Wednesday. Pics/AFP

Sensex lost 1630.85 points or 6.62 per cent to close at 22986.12 points, while Nifty lost 508.15 points or 6.795 to close at 6,980.95 points. Half these points were lost on Thursday alone when it seemed that there was just one way and that was down.

Prime Minister Narendra Modi speaks during the opening ceremony of ‘Make in India Week’ in Mumbai where over 190 companies, and 5,000 delegates from 60 countries, are taking part
Prime Minister Narendra Modi speaks during the opening ceremony of ‘Make in India Week’ in Mumbai where over 190 companies, and 5,000 delegates from 60 countries, are taking part

The broader indices saw BSE100, BSE200 and BSE500 lose 6.83 per cent, 6.83 per cent and 6.96 per cent respectively with BSEMIDCAP losing 6.96 per cent and BSESMALLCAP 8.39 per cent. There was mayhem across the board and virtually no sector or stock was spared.

Going down
There were no sectoral gainers and the one to fall the least was BSECODUR, down 4.00 per cent. The losers were led by BSEREALTY down 11.35 per cent, BSECAPGOOD 8.80 per cent, BSEPSU 8.64 per cent, BSEMETAL 8.21 per cent, BSEOIL&GAS 8.08 per cent and BSEIT 8.05 per cent. The banking sector saw PSU banks come clean with their Non-Performing Assets (NPA) report a huge drop in profits and some banks reporting losses. BSEBANKEX lost 7.68 per cent.

In individual stocks, the top gainers were Idea Cellular up 8.43 per cent, followed by Bharti Tele 5.91 per cent. The losers were many in number as compared to the gainers that were led by PNB 21.82 per cent, BHEL 21.27 per cent, DLF 15.81 per cent, ONGC 12 per cent, Tata Motors 11.45 per cent, Canbank 10.48 per cent, BOB 9.89 per cent and HDFC 8.45 per cent. Virtually nothing was spared.

Dow Jones lost 231.13 points or 1.43 per cent to close at 16,973.84 points. The Indian rupee lost 59 paisa or 0.87 per cent to close at R 68.23. The Chinese have celebrated their new year which is named after the monkey and would be reopening their markets after a week’s holiday. One only hopes that the super active ‘monkey’ doesn’t turn adversely for global markets after the holiday. In what could be termed as an important reassuring statement the Chinese Central bank did assure that devaluation of the currency is done with.

More losses
Since the markets began trading in the new calendar year 2016, one has seen the Sensex lose a staggering 3,174 points or 12.13 per cent from the level of 26,160 points. Nifty at the same time lost 983 points or 12.34 per cent from a level of 7,963.20 points. Incidentally, we had gained in trading on January 1 when almost all markets were closed.

In primary market news, we had two listings during the last week on Monday and Friday. Shares of Precision Camshaft listed on Monday and were under pressure closing at R 158 against an issue price of R 186, a weekly loss of Rs 28 or 15 per cent. Shares of Teamlease Services listed on Friday and gained Rs 172 or 20 per cent to close at Rs 1022. Very clearly the two issues performed opposite of each other. The issue from Quick Heal Technologies Limited closed during the week and was oversubscribed 10.80 times.

Prime Minister Narendra Modi inaugurated the ‘Make in India’ mega event at the Badra-Kurla Complex (BKC) on Saturday. From data available after the first day, business deals have been signed. It would become clearer as the days progress about the total business generated and more importantly the new jobs that would be created with this mega initiative. The state of Maharashtra has taken the lead to host this first of its kind event which would end on Thursday, February 18.

Corporate struggle
Results reporting season for the quarter October-December 2015 has ended and by and large the picture that emerged is not too great for corporate India. Corporate sector is struggling and growth is hard to come by.
The silver lining has been the manufacturing sector where softer commodity prices and crude oil have helped contain costs.

While in normal circumstances this would have led to better margins, a part of it has been lost on account of rupee depreciation and the larger part to price reductions to remain competitive. Probably in this week a summary of result performance would be available that would help gauge the sweet spot for the industry, if any.

The week ahead sees Chinese markets reopening after a week long holiday. The world would have its fingers crossed to prevent any untoward incidents which could rattle global markets. With last week’s sharp fall a bounce is but natural, how long and far is the question. It would remain just a correction and nothing more. Trade cautiously. Look for global cues rally to continue. In India, budget action is a week away, nothing immediate is expected.

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

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