Turbulent times call for a measured response
The markets continued to remain very choppy and closed virtually unchanged. They gained on three of the five days of trading, and yet, were unchanged. The BSE SENSEX lost 33.26 points or 0.12 per cent to close at 27,803.24 points. NIFTY lost 0.20 points to close at 8,541.20 points. The broader indices like the BSE100, BSE200 and BSE500 gained 0.26 per cent, 0.43 per cent and 0.52 per cent respectively. BSEMIDCAP was up 1.25 per cent and BSESMALLCAP up 1.07 per cent.
Planting paddy in a terrace field near Shillong. A good monsoon means bright prospects for the economy. Pic/AFP
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The top sectoral gainer was BSEOIL&GAS up 2.51 per cent followed by BSEHEACAR 1.91 per cent and BSEAUTO 1.09 per cent. The losers were led by BSEBANKEX down 1.58 per cent and BSECONDUR 1.22 per cent. In individual stocks, the top gainer was Cairn India up 10.95 per cent. The state run oil marketing companies were big gainers with HPCL up 9.35 per cent, Indian Oil 9.11 per cent and BPCL 4.96 per cent. The losers were the banking companies led by the PSU banks. PNB down 11.58 per cent, Union Bank 9.55 per cent and Bank of Baroda 8.27 per cent. Axis Bank lost 4.82 per cent.
History
The Indian Rupee lost 2 paisa or 0.03 per cent to close at Rs 67.08. Dow Jones inched upwards gaining 54.30 points or 0.29 per cent, to close at 18,570.85 points. Shares of L&T Infotech listed on the exchanges and history repeated itself five years later. On August 16 2011, shares of L&T Finance had listed and that issue had received a fantastic response from retail investors. Shares were allotted at Rs 52. They closed lower with losses of 3.91 per cent. Fast forward to July 21, 2016 when shares of L&T Infotech were listed. These shares were allotted at Rs 710 with a discount of Rs 10 to retail investors. The issue was overall subscribed 11.69 times with the retail portion subscribed 7.39 times. A total of 10.90 lakh applications were received. On day one, the shares closed at Rs 697.65, a loss of Rs 12.35 or 1.7 per cent. One hopes for the brand and the retail investor that the third issue likely to hit the market from the group, L&T Technologies makes some money for investors.
Issues
The issue from Advanced Enzyme Technologies Limited received excellent response and was oversubscribed 116.39 times. The QIB portion was oversubscribed 94.53 times, HNI 393.94 times and retail 11.69 times. The primary markets seem to be having a good time and almost nine out of 10 issues have made money for successful applicants. Cairn India and Vedanta Limited announced new terms for the merger of Cairn India with Vedanta. The term stipulates that one share would be given in Vedanta for each share of Cairn India along with 4 preference shares of Rs 10 each carrying a coupon of 7.5 per cent and redeemable after 18 months. This simply put, implies that shareholders would get Rs 40 extra after 18 months and the amount would earn a simple interest of 7.5 per cent. This announcement could explain the sharp rally in the prices of Cairn India and Vedanta last week.
GST
This week sees July futures expire on Thursday, July 28. The current value of NIFTY at 8,541.20 points is higher by 253.45 points or 3.06 per cent. The bulls have an upper hand and a clear advantage at that. The possibility of GST being tabled and passed in the week seems bright. Assuming this does happen, the markets could see euphoria thereafter. However euphoria and pessimism do not last beyond 48 hours. Assuming that GST is passed in the coming week or the following one, it would make sense to sell and reduce one's position in the market significantly. Post the euphoria, markets would correct and offer plenty of opportunities to re-enter at lower levels. Markets are extremely choppy and seem to have reached a point where they are waiting for news to peak out and correct. The news would be the enactment of GST and if the same gets delayed into August, markets could correct immediately as well. Play markets cautiously, use any rallies to exit position.
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 and under no circumstances should be used for actual trading or making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment or trading decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at his or her risk.
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