Tiring, not firing
Though there are a number of positives, we need faster news flow overall
The markets had a stellar week and rose for the first four days before profit taking and selling at higher levels saw the market give up some of the gains it had made. The BSE SENSEX ended with gains of 485.19 points or 1.89 per cent at 26,126.75 points while the Nifty gained 126.55 points or 1.65 per cent to end at 7,790.45 points.
After a dry week, it was pouring in Mumbai on a super wet Sunday. Pic/Shadab Khan
The markets have been making record highs. The broader indices like the BSE100, BSE200 and BSE 500 recorded gains of 1.14 per cent. 0.91 per cent and 0.73 per cent respectively while BSEMIDCAP and BSESMALLCAP lost 0.81 per cent and 1.41 per cent.
The sectoral gainers were led by BSEIT up 4.14 per cent followed by BSEFMCG up 3.57 per cent and BSEHEALTHCARE up 2.57 per cent. The losers were led by BSEPOWER down 3.36 per cent, BSEREALTY 2.84 per cent and BSECAPGOODS down 2.23 per cent.
In individual stocks the gainers were led by HDFC up 8.46 per cent, TCS up 6.64 per cent and Hind Unilver up 6.43 per cent. The losers were led by Cairn India down 10.36 per cent, IDFC down 5.49 per cent and Tata Power down 4.63 per cent.
The markets have been on a roll over the last three quarters but are showing signs of tiring. Markets have to be fed on news and inflows. While inflows are there and FIIs are lapping up the great Indian transformation in politics, we need news flow faster than it is happening.
The Union budget presented on July 10 spoke of 49 per cent FDI in insurance and the cabinet approved it last week. Such quick decision making has never happened before and is certainly welcome but we have been left behind so far in the last five years, that we need our daily clock to be of 48 hours instead of the normal 24 hours.
FIIs have invested Rs 1,950 crore in the last week and Rs 11,000 crore in July so far. From January to June 2014 they have already invested Rs 62,600 crore or over 10 billion dollars. They are very happy with the change of guard and the clear and decisive mandate that the people have given.
There are no coalition politics that need to be taken care of and decisions alone need to be taken. It is this situation that is attracting money from all over the world. Domestic institutions were buyers of equity worth Rs 397 crore, while they have bought equities worth Rs 2,350 crore in the month so far. This is in stark contrast to their sales of Rs 6,500 crore in the first six months of the calendar year.
The setting up of the BRICS bank will be a great thing for India’s development. Earlier, the western world led by USA and some of the European nations lent money to India through the IMF and World Bank with sovereign guarantee. Now it would be China providing the money to the BRICS bank and used for India's infrastructure needs.
This would help the country grow faster, as India would be able to extract better rates of financing from the bank then they were with the World Bank. China is keen to be a service provider or partner in infrastructure building and would be willing to finance projects through the bank which it undertakes in the country.
The Dow Jones closed at 16,960.57 points down 139.61 points or 0.81 per cent. The FED meets on Tuesday and Wednesday this week for its review meet. The week ahead has a trading holiday on Tuesday and Thursday sees futures expiry. June series expired at a level of 7,493.20 points.
The current level of Nifty is higher by 297.25 points or 3.96 per cent giving bulls the upper hand. The expiry will be the key event for the week. Cairn India was a big loser after it disclosed in a conference call that the company had lent money to its group company Sesa Sterlite, without seeking minority shareholders' approval.
The share fell sharply since and is down 10.36 per cent at Rs 308.90. Results season are certainly giving indications that the economy has bottomed out and is on its way turning around. Though actual climb and positive results may still be a couple of quarters away, the bottom has certainly been made.
The rain gods too seem to have tuned softer towards our country and the skies have opened up. The deficit is reducing and the rain is spreading to larger areas. It is early days to say with surety but the El-Nino effect is certainly not there and the drought like situation is certainly disappearing.
This is good news on the inflation front. The week ahead would be driven by expiry cues and what the FED does in its meet. Individual stocks would be driven by their results. The markets are looking tired but certainly not overbought. Trade the market 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 issues on his website http://ak57.in