Tale of two halves

There was ground lost and regained at Dalal Street last week, but it all ended well for investors and traders

The week gone by had two distinct halves. In the first, that lasted three days, markets lost ground, and in the second half regained lost ground and more, to end positive.

Voters wait to cast their vote in Bihar. Markets hope to do better once the atmosphere is conducive in the aftermath of poll results when Parliament is likely to pass pending bills. Pic/PTI
Voters wait to cast their vote in Bihar. Markets hope to do better once the atmosphere is conducive in the aftermath of poll results when Parliament is likely to pass pending bills. Pic/PTI

Sensex gained 135.09 points or 0.50 per cent to end at 27,214.60 points whilst Nifty gained 48.45 points or 0.59 per cent to end at 8,238.15 points. Broader markets saw BSE100, BSE200 and BSE500 gain 0.70 per cent, 0.65 per cent and 0.70 per cent respectively.

BSEMIDCAP gained 1.01 per cent while BSESMALLCAP gained 1.30 per cent. In sectoral gainers, BSECAPGOODS was the top gainer up 2.96 per cent followed by BSEAUTO 2.70 per cent and BSEOIL&GAS 2.40 per cent. Losers were led by BSEIT 4.48 per cent followed by BSETECH 3.57 per cent and BSEHEALTHCARE 0.27 per cent.

Performance tab
In individual stocks, the top gainer was Tata Motors 8.57 per cent, followed by NMDC 9 per cent, and BPCL 7.32 per cent. Losers were led by Infosys down 6.34 per cent even after it posted results ahead of expectations. DLF was down 8.37 per cent followed by TCS 5.85 per cent and Hind Unilever 3.92 per cent.

Dow Jones gained 131.48 points or 0.76 per cent to close at 17,215.97 points. The rupee lost marginally and was down 6 paisa or 0.09 per cent to close at Rs 64.80. FII’s were buyers of Rs 1,636 crores while domestic institutions were buyers of a small 131.48 crores.

Exports for September fell 24.3 per cent to R 21.84 billion dollars. This is the tenth consecutive month where exports have fallen. The trade deficit too fell but that is not consolation enough. The government needs to take some steps which would start reviving our exports as this seems to become a major cause of worry.

Reliance industries posted its best GRM (gross refining margin) of 10.6 dollars in seven years. This also was immediately reflected in share prices of the OMC’s (Oil Marketing Companies) of BPCL up 7.32 per cent and HPCL 4.55 per cent. Of course, these companies are yet to report results and their margins are substantially lower than Reliance.

New players
The week gone by saw the IPO from Coffee Day Enterprises close its books. The issue was to raise Rs 1,150 crores in a price band of Rs 316-328 and had allotted shares to anchor investors at a midway price of Rs 322.

Looking at subscription where HNI and Retail categories were undersubscribed at 54 per cent and 90 per cent and overall 1.8 times, it appears quite logical that the issue would be priced no higher than what was given to anchor investors. This week would see two new companies make their roadshows to raise capital.

The company which owns Indigo Airlines, (Interglobe Aviation Ltd) would be tapping the markets along with the issue from S H Kelkar and Company. The latter company is into the business of flavours and fragrances. Both companies are having a fresh issue and an offer for sale component would be opening in the week beginning October 26. More on these issues next week once the roadshows are over.

Global markets have been better and rallied to some extent after it has become clearer that rate hike in the US seems to having being postponed for the immediate future. The probability of a raise in the current calendar year seems more unlikely than likely. This feeling has driven markets higher globally.

Mixed bag
Results reported so far for the July-September quarter is a mixed bag and do not give the comfort that was being expected of an industry doing well and seeing a major revival. Maybe it’s still early days in the result season and the scene would change when the bulk of results are announced. One hopes that some turnaround signs are visible.

Then markets are hoping that post the Bihar election results there would be a better conducive atmosphere in Parliament to pass pending bills and the business part of the house would be easier. It is this feeling and expectation that is driving markets upward.

The current mood is becoming positive globally and FII’s who had been sellers in August and September are buyers in October. So a combination of these factors has made the mood positive. Performance of global cues and results from individual companies will be the main drivers this week. The Dussehra holiday on Thursday could see a subdued day or positions being liquidated on Wednesday towards close. Trade cautiously.

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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