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Take it easy policy

Updated on: 23 January,2017 10:21 AM IST  | 
Arun Kejriwal |

The sidelines is the place to be during these listless days

Take it easy policy

Pedestrians pose with a waxwork figure of US President-elect Donald Trump prepared to be placed on a street in Seoul, S Korea. Most Asian markets turned lower with nervous investors awaiting the Trump effect. Pic/AFP
Pedestrians pose with a waxwork figure of US President-elect Donald Trump prepared to be placed on a street in Seoul, S Korea. Most Asian markets turned lower with nervous investors awaiting the Trump effect. Pic/AFP


The markets were directionless for the first four days. and then a sharp correction on Friday saw markets end the week on a depressed note. The BSE SENSEX lost 203.56 points or 0.75 per cent to close the week at 27,034.50 points. NIFTY lost 51 points or 0.61 per cent to close at 8,349.35 points. Broader markets saw the BSE100, BSE200 and BSE500 lose 0.43 per cent, 0.36 per cent and 0.31 per cent respectively. BSEMIDCAP was down 0.44 per cent but BSESMALLCAP was up 0.88 per cent.


Union Finance Minister and BJP leader Arun Jaitley during a press conference in Amritsar. Pic/PTI
Union Finance Minister and BJP leader Arun Jaitley during a press conference in Amritsar. Pic/PTI


The top sectoral gainer was BSEFMCG up 1.87 per cent followed by BSECONDUR at 0.88 per cent. The top sectoral loser was BSEOIL&GAS down 1.335 followed by BSEHEACARE 1.30 per cent and BSEIT 1.20 per cent. In individual stocks the top gainer was Hind Unilever up 4 per cent followed by DLF 3.63 per cent and ITC 2.38 per cent. The losers were led by Reliance down 5.91 per cent followed by Axis Bank 4.75 per cent and Coal India 3.51 per cent.

Buy American, Hire Americans
The 45th President of the USA, Donald Trump was sworn in on Friday, January 20. He has launched a punch line of ‘Buy American, Hire Americans.’ While there is nothing new in the line itself, ramifications could be far reaching. Countries like China could get affected in terms of trade. India may get affected in terms of its offshoring of IT professionals. On the other hand, one needs to see what happens going forward on statements made by the President. This election was fought at a very low standard and there was acrimony during the campaign.

The Dow Jones lost 58.48 points or 0.29 per cent for the week to close at 19,827.25 points. The Dow was weak before the President’s swearing in began on Friday and was down just short of a 100 points. It finally closed on Friday with a gain of 95 points. The Indian Rupee lost 3 paisa or 0.04 per cent to close at Rs 68.18.

Close look at funds
The CPSE-ETF received an excellent response in primary markets. The issue is oversubscribed. As this is a fund offering having no bidding, details of subscription category wise would be known only a couple of days later. From estimates, it appears that retail portion saw bids of around Rs 2,500 crore. Pension funds have also bid aggressively. The issue has preference or retail investors with the entire 4,200 crore available for subscription followed by pension funds and only then QIBs and HNIs. The possibility of the last two not getting allotment, or only a very small portion, is quite likely.

Upper hand for bulls
The other issue from BSE which opens for subscription on Monday, January 23 and closes on Wednesday, January 25 is seeing a lot of interest. The exchange is offering 108 lakh shares in a price band of R 805-806. The issue would raise Rs 1,243 crore in total from the offer for sale. This would be the second listing of an exchange in India after MCX. There is an active grey market currently in this share with a premium of almost about 16-185 over the issue price. The company on Friday allotted 46.28 lakh shares at R 806 to 25 anchor investors comprising 38 entities. The highest allocation was made to Smallcap World Fund which was allotted 8,68,500 shares or 18.77 per cent of the anchor allocation. The list has a large number of marquee investors and domestic mutual funds too. January series expires on Wednesday, January 25 as Thursday is a Republic Day holiday.

The current value of NIFTY of 8,349.35 points is higher by 245.75 points or 3.03 per cent compared to the December close. The gain is substantial. It gives the bulls an upper hand. One never knows what the market has in store. With a mere three days to go, the series should go in favour of bulls but with a lesser lead.

Expectations from the budget
The budget is expected to be announced on Wednesday, February 1. The expectation is some reduction in direct taxes for individuals and corporates. Corporate as per the roadmap announced by the Financial Minister A Jaitely, some time ago. The idea of personal tax would be to sooth feelings of the common man after the November 8 event. The Govt has ample money in the kitty and some of that could be used productively to induce growth through higher spending in the infrastructure space. I also believe some measures on affordable housing should also be announced, so that a meaningful thrust could be given there. Markets seem to be going nowhere. The pre-budget rally seems to be done and we would be trading in a listless manner. Stay on the sidelines right now and use any sharp dips or rallies to enter.

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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