An action packed week
Global tumult, rains playing truant and expected results all combined to make it a time called as hurly-burly, but there’s no reason to be surly
A lot can happen in a week’s time and that was exactly what happened in the markets. Greece, which appeared to be a lost cause managed to save its skin for the time being and cobble together a deal which gave it breathing time.
German Chancellor Angela Merkel (C) and delegates leave after a special session at the Bundestag (lower house of parliament) in Berlin. Merkel made an impassioned plea to German lawmakers to back the new Greece deal. Pic/AFP
Starting today, their banks will reopen, they will still be a part of the Eurozone but when the next crisis will happen is anybody's guess. Iran has been able to have a deal done and have the sanctions imposed on account of it being a nuclear state removed.
This saw a fresh fall in oil prices as new supplies from Iran will hit the world. In India too we had petrol and diesel prices cut at the pump level. The markets had a super week and the BSESENSEX ended the week with gains of 801.91 points or 2.90 per cent at 28,463.31 points while NIFTY notched up gains of 249.30 points or 2.98 per cent at 8,609.85 points.
The broader markets saw the BSE100, BSE200 and BSE500 gaining similar and a tad more at 2.95 per cent, 3.01 per cent and 3.04 per cent respectively. BSEMIDCAP gained 3.22 per cent and BSESMALLCAP gained 3.36 per cent.
The top sectoral gainer was BSEIT up 5.14 per cent followed by BSETECK 4.81 per cent, BSEHEALTHCARE 4.72 per cent and BSECONDUR 4.12 per cent. There were no losers but BSEREALTY gained the least at 0.28 per cent.
In individual stocks, the top gainer was Infosys up 6.94 per cent followed by Maruti Udyog 6.55 per cent, BHEL 6.16 per cent and Lupin 5.56 per cent. The OMC's or oil marketing companies had a stellar run with HPCL up 8.09 per cent, BPCL 6.70 per cent and Indian Oil 4.34 per cent.
The losers which were hardly any saw Titan Industries down 1.87 per cent, NMDC 1.22 per cent, Tata Motors 0.80 per cent and ONGC 0.46 per cent. FIIs were back to their buying ways and bought stock worth Rs 2,870 crore during last week. Domestic institutions were small sellers as provisional data showed.
The DOW Jones gained 326.04 points or 1.83 per cent to close at 18,086.45 points. The Indian rupee lost 7 paisa or 0.11 per cent to close at 63.46. The rains in the first fortnight of July have been below average and while it is a cause of concern, all is certainly not lost.
We had a good start to the monsoon and early sowing has taken place. Rains in the second fortnight would be crucial and would be a key driver for the markets. Rate cut hopes have again surfaced and the expectation is that RBI would cut rates when they meet in August for the review.
Results have begun but they have not offered any comfort or cause for concern so far as probably the few results that have been declared were on expected lines. Going forward as the season picks up the expectations of lead indicators would drive stocks, sectors and the broad markets.
In keeping with the concept that derivatives are risky and not for the uninitiated, SEBI has increased the lot size from Rs 2 lakh to 5 lakh with effect from all contracts for the November series. There would be no immediate effect due to this, but one could expect that other things being equal, there would be a dip in trading volumes at the beginning of the period when changes take place.
The primary market is heating up once again and it is believed that about half a dozen companies are likely to tap the markets in the next 15 days. How many will tap, how many will be successful in raising the money and the most important question, in how many will people make money will all depend on valuations.
Under the pretext of "Acchhe Din", promoters and merchant bankers should not raise their expectation but leave something more on the table for investors so that "Acchhe Din" happens for investors. Besides keeping fingers crossed, there is nothing more that investors can do as pricing is a sole prerogative of the above mentioned people.
Global markets are recovering from the "Chinese Flu" that it was affected by and are slowly and steadily bouncing back from the same. The FED meets in the last week of July and something about rate hikes would be given a clearer shape at that meeting.
While nobody denies that interest rates at near zero cannot continue for eternity, the mere fact that you may have to pay more is frightening and is affecting the markets. World markets have become super vulnerable to news flow in the immediate short term and they seem to be reacting more than they should. Thankfully, India is not so and the reaction seems to be more mature and rational.
The markets are likely to consolidate their gains of the previous week at open and then build further strength or gains as the week progresses. It makes sense to hold on to your positions which are in the positive and allow them to gain further. Markets are well poised to rise further on a weekly basis.
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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