The week gone by went horribly wrong for the market. RBI cut repo rates by 25 basis points but the market wanted more. Secondly, the remarks by Raghuram Rajan post the cut were wrongly interpreted and there was confusion. Greece continues to be on the point of default and is hanging by that last straw which could make it safe or drown.
Greece bought time in debt crisis negotiations with official creditors when it moved to bundle four looming International Monetary Fund (IMF) loan payments into one, to be paid by the end of June. Pic/AFP
Finally, the speculation of whether interest rates would be hiked in the US by FED in its next meeting kept markets under pressure. All of these things put together saw our markets lose under 4 per cent for the last week. Sensex lost 1,059.95 points or 3.81 per cent to close at 26,768.49 points. Nifty lost 318.95 points or 3.78 per cent to close at 8,114.70 points.
The broader markets lost similar with BSE100, BSE200 and BSE500 losing 3.92 per cent, 3.79 per cent and 3.80 per cent respectively. BSEMIDCAP lost 3.38 per cent while BSESMALLCAP lost 3.80 per cent. There was just one minor sectoral gainer in BSECAP GOODS up 0.04 per cent.
The losers were led by inconsequential BSEREALTY down 8.29 per cent but the real loser was BSEBANKEX down a staggering 6.19 per cent. Others included BSEHEALTHCARE 5.84 per cent and BSEFMCG 4.52 per cent.
In individual stocks, Coal India gained 3.65 per cent followed by Reliance up 3.31 per cent. Idea Cellular was up 2.92 per cent, NTPC gained 2.52 per cent. Losers were Sun Pharma down 12.11 per cent, ICICI Bank 10.34 per cent. HCL Tech, Tata Motors lost an identical 8.10 per cent whilst SBI was down 7.32 per cent. ITC was down 6.72 per cent.
The extent of damage can be gauged from the fact that almost all the heavyweights in the index were on the losing side except Coal India and Reliance which were on the positive side. The carnage in the banking sector was to be seen to be believed.
Fears of a delayed monsoon kept the markets on tenterhooks and the good news is post Friday market closure, the monsoon has arrived in Kerala. To make readers further happy pre-monsoon showers also hit Mumbai yesterday evening. Probably this would bring cheer to the markets in this week.
Maggi noodles were plastered on product content issues which caused Nestle India, the manufacturers to see share prices plummet to R 5,997 a weekly loss of R 860 or 12.54 per cent. Firefighting on the brand has begun and clarity is likely to emerge as the product has been banned in many states.
Prime Minister Narendra Modi was in Bangladesh and an important deal starting a bus service between the countries has begun. This would allow India to through pass Bangladesh and save immense time and distance between West Bengal and the North East.
Dow Jones with the rest of the world markets was weak on account of Greece. Dow lost 161.24 points or 0.89 per cent to close at 17,849.46 points. Tomorrow and day after, June 9 and 10, FED would be meeting to review the economy and take call on interest rates.
FIIs were sellers of R 1,900 crores in May while domestic institutions were buyers of Rs 4,175 crores during the same period. The rupee amidst volatility gained 6 paisa or 0.09 per cent to close at Rs 63.75. The results season is over and by and large there remains some disappointment on the performance front. Valuations have corrected significantly from the peak levels seen in March 2015 and are now attractive.
Short term concerns about the monsoon and global cues on Greece and FED are current irritants. One needs to take a call on these issues or wait till they are sorted out before entering the market at higher levels. The worst seems to be over for the markets. US FED would take a call which suits not only the American economy but in the process does not jeopardise the global economy which is inching upwards.
I believe the time has come to take a plunge into the markets all over again and look for a return over the next two quarters. Keep your fingers crossed for the welcome rain showers and hope that the monsoon turns normal. Our economy, farmers and markets depend on them.
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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