Bad days at Dalal Street

Jul 27, 2015, 08:30 IST | Arun Kejriwal

There were losses seen on four of the five trading days in the last week because of poor corporate results, logjam in Parliament and global cues, which added to the woes

It was a bad week at the markets with losses suffered on four of the five trading days. Logjam in Parliament led to a washout in the first week. This was responsible for the market behaviour. Global cues and poor corporate results were the other reasons.

BJP MPs hold placards during a protest near Mahatma Gandhi’s statue against Congress party for not allowing Parliament to function during the monsoon session. Pic/PTI
BJP MPs hold placards during a protest near Mahatma Gandhi’s statue against Congress party for not allowing Parliament to function during the monsoon session. Pic/PTI

Sensex lost 351 points or 1.23 per cent to close at 28,112.31 points. Nifty lost 88.30 points or 1.03 per cent to close at 8,521.55 points. Broader indices saw BSE100, BSE200 and BSE500 lose 1.00 per cent, 1.05 per cent and 0.98 per cent respectively. BSEMIDCAP lost 0.64 per cent BSESMALLCAP lost 0.41 per cent.

In sectoral gainers, BSEIT was the top gainer up 3.06 per cent followed by BSETECK at 2.15 per cent and BSECONDUR at 1.32 per cent. Losers were led by BSEHEALTHCARE down 5.73 per cent, followed by BSEREALTY 4.20 per cent, BSECAPGOODS 3.10 per cent and BSEBANKEX 2.46 per cent.

In individual stocks, Infosys was the top gainer up 8.68 per cent followed by HPCL 5.18 per cent and IOC 4.30 per cent. Losers were led by Lupin down 15.34 per cent followed by Sun Pharma 11.63 per cent, DLF 9.76 per cent, Vedanta 8.87 per cent, Tata Steel 6.75 per cent and ICICI Bank 5.32 per cent. Losers were across sectors and it clearly showed that the markets were knocked out.

Dow Jones too had a big fall and lost 517.92 points or 2.86 per cent to close at 17,568.53 points. The Indian rupee lost 57 paisa or 0.90 per cent to close at R64.03 to the dollar. FII’s were buyers of shares worth R1,411 crores whilst Domestic institutions were buyers of R112 crores.

Watch out
There is plenty of economic data due this week on the global front. Coupled with that we have the US FED meeting tomorrow and day after and it is widely expected that rate hike decision and timeline would emerge from the same.

In India, progress of the monsoon and what happens in Parliament would be keenly watched. The primary market sees an offer for sale from Syngene International Limited. which is a subsidiary of Biocon Limited. The company is offering 2.2 crores shares in a price band of Rs 240-250. The issue opens today and closes on Wednesday, July 24.

The P E ratio at which shares are being offered is between 26.08 at the lower band to 27.17 times at the upper band. The issue looks expensive compared to the fact that the parent in 10/11 years of its listed life has not rewarded its shareholders or the returns that shareholders have got is below average of pharma companies.

The issue would in all probability be subscribed looking at the current buzz in the pharma sector. The government restarts its divestment program with an OFS (Offer For Sale) of 6.60 crore shares of PFC (Power Finance Corporation). The floor price has been fixed at Rs 254 which is a discount of Rs 5.55 or 2.14 per cent to the closing price of Rs 259.55 on Friday on the BSE.

Considering numerous requests from various intermediaries, this time around retail investors have been allowed to bid at ‘Cut Off’ which would be the lowest price at which shares are sold to the non-retail category. There is a 20 per cent reservation for retail category. This issue at the floor price would garner Rs 1,676 crores for the exchequer.

Future series
July series futures expire on Thursday, July 30. The current value of Nifty is higher by 123.55 points or 1.47 per cent to the previous June series of 8,355 points. While the month has been choppy and volatile, bulls would like to hold on to the slim advantage that they have and ensure that the series expires in positive territory.

The markets are at crossroads and looking for direction. History has it that they remain subdued and depressed during the time that parliament is in session. The reasons are quite a few and the first week was an example where the entire week was simply a washout.

Whether the second week would be any different only time will tell, but crucial legislation is pending and if lawmakers take the nation to ransom in this manner, the electorate is aware of the power of the vote. Besides parliament, global cues particularly what the FED does would be a key driver for the week ahead.

Results for the quarter are bordering on the disappointment side. They could provide the surprise package, positive or negative in the coming week. Hope the monsoon continues to progress on a satisfactory note as it has done last week and keeps all smiling.

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

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