Dalal Street feeling the heat

May 02, 2016, 09:11 IST | Arun Kejriwal

The monsoon offers hope to sweating investors as choppy trading is set to continue in the month of May as well

The week gone by was a mixed bag and we had sharp movements on both sides. Markets began the week on a weak note and then saw a huge rally only to lose ground on expiry day. The week saw the Sensex close with losses of 231.52 points or 0.90 per cent at 25,606.62 points.

Rajya Sabha MP Jaya Bachchan makes her way to Parliament as water bottles are kept along the steps on a hot day. Pic/PTI
Rajya Sabha MP Jaya Bachchan makes her way to Parliament as water bottles are kept along the steps on a hot day. Pic/PTI

Nifty lost 49.50 points or 0.63 per cent to close at 7,849.80 points. The broader markets saw BSE100, BSE200 and BSE500 lose 0.60 per cent, 0.59 per cent and 0.60 per cent respectively. BSEMIDCAP gained a tad at 0.22 per cent but BSESMALLCAP lost 0.53 per cent. In sectoral gainers, the top performer was BSEREALTY up 3.71 per cent followed by BSEBANKEX 0.42 per cent and BSETECH 0.31 per cent. The losers were led by BSEPOWER down 2.21 per cent, followed by BSEPSU 1.35 per cent, BSECONDUR 1.25 per cent, BSEAUTO 1.24 per cent and BSECAPGOODS 1.21 per cent.

Tale of stocks
In individual stocks, HDFC Bank rose 3.75 per cent followed by Bharti Tele 3.03 per cent. In other stocks, Yes Bank rose 7.75 per cent while Kotak Bank was up 5.92 per cent. On the losing side was ICICI Bank down 6.09 per cent, State Bank of India 5.48 per cent, Reliance Industries 5.39 per cent and Cairn India 4.26 per cent. HCL Tech lost 11.24 per cent. Results from corporates are a mixed bag and nothing could be more confusing than bank results.

While Kotak and Yes Bank reported a good set of numbers, ICICI Bank provided Rs 3,657 crores for the year towards a special reserve for non-performing assets. The fourth quarter results because of this provision saw net profits at R 407 crores against Rs 4,629 in the same quarter in the previous year. The provision during the quarter was Rs 3,478 crores.

April futures expired on an extremely weak note with markets suffering huge losses on that day. Sensex lost over 450 points while Nifty lost over 130 points. For the month of April, Nifty futures however gained 130.75 points or 1.69 per cent to close at 7,847.25 points.

Foreign influences
World markets were under pressure and the US Fed kept interest rates unchanged and so did the Bank of Japan. Markets did not like this as they expected the Japanese Central Bank to release further stimulus to the economy. The Dow Jones lost 230.11 points or 1.28 per cent to close at 17,773.64 points.

India is the largest manufacturer of cut and polished diamonds with a market share of 65 per cent in terms of value, 85 per cent in terms of volume and 92 per cent in terms of pieces. Fourteen out of 15 diamonds set in jewellery worldwide are processed in India. This industry (Gems and Jewellery export Promotion council) reported negative growth for the first time after 2008. Net exports fell 5.30 per cent in rupee terms and 11.70 per cent in dollar terms. Gems and jewellery account for 13 per cent of India’s total exports and are currently the third largest export earner for the country.

In primary market news, the issue from Thyrocare Technologies Limited which opened on Wednesday and closed on Friday received excellent response. The issue was subscribed 39.33 times overall with HNI portion subscribed 138.70 times and retail portion 5.27 times. The other issue from Ujjivan Financial Services Limited which is into microfinance and has received a Small Finance Bank (SFB) license which would be closing for subscription today.

The company is raising Rs 882 crores from a fresh issue of R 358 crores and a secondary offer for approximately Rs 524 crores in a price band of Rs 207-210. The issue would receive excellent response on the last day as the earlier issue from the same sector; Equitas Holdings was very well received and made handsome returns for investors.

All about issues
There is another issue opening from Parag Milk Foods Limited. The issue opens on Wednesday and closes on Friday. The issue is looking to raise Rs 767 crores at the top end of the band of R 220-227 comprising of a fresh issue of Rs 300 crores and an offer for sale of 205.72 lakh shares. This would be the second issue from the dairy industry in the last seven months.

The company is the manufacturer of ‘GO’ cheese and makes milk products across the value chain from liquid milk, skimmed milk powder, ghee, cheese, whey proteins, curd and paneer amongst others. The company is a ‘B to C’ company selling its products to end users or customers. The challenge for the company would be milk procurement to continue to grow the business as milk is perishable and comes in small quantities from hundreds of thousands of farmers.

The temperature is rising in the country because of the extreme heat and some issues in Delhi as well. Parliament is functioning this time even though it has its periods of stoppages. On the other side, we have the Supreme Court which has taken a very positive stand on the defaulter’s case and things seem to be moving at a very brisk pace.

Markets would continue to be choppy in the week ahead and the key driver for the markets now would be the progress of the monsoon. Trade cautiously.

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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