RBI review, monsoon and foreign happenings keep everyone guessing

The week gone by was a quiet one, without any fireworks. Sensex gained 189.43 points or 0.71 per cent to close at 26,843.03 points. Nifty gained 64.15 points or 0.79 per cent to close at 8,220.80 points. The broader market saw the BSE100, BSE200 and BSE500 gain similar at 0.76 per cent, 0.71 per cent and 0.72 per cent respectively.

The RBI review tomorrow will have an effect on Nifty and Sensex. Pic/ Datta Kumbhar
The RBI review tomorrow will have an effect on Nifty and Sensex. Pic/ Datta Kumbhar

BSEMIDCAP gained 0.42 per cent and BSESMALLCAP was up 0.34 per cent. In sectoral indices, the top gainer was BSEMETAL up 4.96 per cent followed by BSEAUTO 3.76 per cent, BSEPSU 1.48 per cent and BSEBANKEX 1.35 per cent. The losers were led by BSECONDUR down 2.68 per cent followed by BSEHEACARE 2.63 per cent and BSEREALTY 0.78 per cent.

Gains and losses
In individual stocks, the top gainer was Tata Motors up 12.49 per cent followed by Coal India 9.81 per cent and Hindalco 14.81 per cent. The losers were led by Sun Pharma down 10.65 per cent, followed by BHEL 8 per cent and Idea Cellular 5.92 per cent.

The star of the week was recently listed Ujjivan Financial Services Limited which gained R 89.85 or 42.79 per cent to close at R 382.95. The company is a microfinance lender and has been awarded a Small Finance Bank (SFB) license. The shares of this company were issued at Rs 210 and were listed as recently as May 10. In under a month, the shares have gained 82.36 per cent. The Indian rupee lost 22 paisa or 0.33 per cent to close at Rs 67.25. Dow Jones lost 66.16 points or 0.37 per cent to close at 17,807.06 points.

The Indian Meteorological Department (IMD) last week upped the monsoon expectation to predict a virtual zero chance of a poor monsoon. This is after a private meteorological company had in the previous week, upped the monsoon forecast. With such a weather forecast in the backdrop, the RBI would be meeting for its bi-monthly review on Tuesday June 7, where a neutral stance is expected with rates being kept unchanged.

Inflation flip flops
Inflation at the retail level had risen in the previous month on account of food prices going up and until the monsoon and the next crop being available could keep pressure on prices. In such a scenario, it is expected that the RBI would play safe and watch the outcome of the monsoon before acting in the next meeting in August.

The result season has ended and it appears that the quarter has been the best in the last ten to twelve quarters with companies being able to sell more. While the situation looks better the performance of India Inc. still needs to improve. A similar survey conducted by CII in association with Ascon for the quarter January to March 2016, indicates that more and more sectors are seeing traction and the confidence is improving. This augurs well for the economy and probably the rain god would bring the icing on the cake.

The European Central Bank (ECB) kept rates unchanged and the same indicates that the zone is struggling. In the US too, the FED is unlikely to raise rates in its meeting scheduled for June 14-15 and prefer to wait for the outcome of the British decision on whether to remain in the European Union or not scheduled for June 23. Clearly, the comfort which existed about the state of the economy some six months ago in the US is now missing and Janet Yellen, the FED chairperson is dilly-dallying on raising rates on some or the other pretext.

Political games
Rajya Sabha elections to fill the seats of retiring members has taken an interesting turn and there would be some changes benefitting the ruling NDA post the June 11 voting if any. The visit of AIADMK chief and Tamil Nadu Chief Minister J Jayalalithaa to Delhi will also be a key development in case she decides to join the NDA or even extend support from outside. The fate of hitherto held up bills would pass the muster.

The markets are waiting for the monsoon to break over Kerala to give them the much needed final push. Many key stocks have moved in a very narrow range in the last week indicating that they need good news to move in either direction. It is therefore advisable to shift focus from the heavyweight benchmark stocks to midcap where the action is likely to continue. Trade cautiously.

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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