Bulls, bears and ballot
Plenty of action and reactions will ensure volatility rules, with election results looming
Markets were super volatile and, at the end of the week, one was confused as to their movement in the coming week. BSESENSEX lost 521.05 points or 1.44 per cent to end at 35,673.25 points. NIFTY lost 183.05 points or 1.68 per cent to close at 10,693.70 points. The broader indices saw the BSE100, BSE200 and BSE500 lose 1.77 per cent, 1.77 per cent and 1.79 per cent respectively. BSEMIDCAP lost 1.07 per cent and BSESMALLCAP was down 0.53 per cent.
The top sectoral gainer was BSE TECH up 1.68 per cent followed by BSE IT 0.77 per cent. the top loser was BSEHEALTHCARE down 4.71 per cent followed by BSEAUTO 4.40 per cent and BSEMETAL 2.98 per cent. In individual stocks, the top gainer was Kotak Bank up 4.06 per cent. The top loser was Sun Pharma, down 16.45 per cent followed by Mahindra and Mahindra 8.73 per cent, and Aurobindo Pharma 7.16 per cent.
The Indian Rupee lost Rs 1.21 or 1.74 per cent to close at Rs 70.80. Dow Jones lost 1,149.51 points or 4.50 per cent to close at 24,388.95 points. In this process it has almost given up all the gains made in the previous week of 1,252 points.
Russia has brought about agreement on OPEC's decision to cut crude production by 1.2 million barrels per day. This brought about some recovery in prices, as US Brent crossed the 60-dollar mark again and settled at 61.67 dollars, a gain of 2.68 per cent. Incidentally, the US has become a net exporter of oil for the first time in 70 years.
The bonhomie generated at the G-20 summit lasted a mere couple of days with different sound bites emerging from different people. On one hand, China is expected to act and import 200 billion dollars of goods from the US so that there is no additional duty in future. On the other hand, the US is not going to change any duties which have already been imposed on China. The arrest of the daughter of the chief of Huawei and company CFO Meng Wanzhou in Canada. has led to the recent DowJones fall last week. Her case hearing resumes on Monday in Canada. This was the major reason for the fall in Dow.
In India, the five-state election results will be announced on Tuesday, December 11. The exit polls indicate that Rajasthan will be won by Congress, honouring the tradition of the ruling party never returning in 20 years. Similarly, Telangana is likely to be won by the ruling TRS and his gamble of having early elections succeeding. In the case of MP and Chhattisgarh, where the ruling BJP is fighting a neck to neck race and battling anti-incumbency of 15 years, it is too close to call. We will know the outcome by Tuesday, midday.
One thing is for sure though, that the market would have factored in the results by the time trading ends on Tuesday. The volatility on that day is going to be sharp and offer trading opportunities to all, whether on the long or short side. Once these elections are over, new combinations and permutations for the general elections due in May 2019 will start doing the rounds.
In other news, during the week, RBI kept interest rates unchanged in its policy meet and markets had no reaction to the same as it was on expected lines.
Markets are waiting for election results and will be on tenterhooks till the same are declared. With exit polls predicting a close fight in two states, one can be sure that till the last results are declared, things could swing. In such a scenario, markets will be on a roller coaster ride and one needs to be careful and not get carried away with the same. Decide to be a contrarian on Tuesday.
If markets are going down, think at what level you would like to buy. Similarly if markets are going up, think at what level or price you would like to book profits. Markets would come back to similar levels sooner rather than later. With volatility being the order of the day, remain on the sidelines and look to enter on sharp dips and sell on strong rallies. Trade cautiously.
Arun Kejriwal is founder of the Mumbai-based advisory firm Kejriwal Research & Investment Services Pvt Ltd.
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.
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