Eye on Turkey

Aug 13, 2018, 08:10 IST | Arun Kejriwal

Turkey is the latest in the line of fire of the US with a financial crisis looming and the Lira taking a sharp dip

Eye on Turkey
The Dow Jones Industrial Average closed down nearly 200 points on Friday, as markets reacted negatively to a sharp plunge in Turkish currency, as Turkey heads toward a potential financial crisis. Pic/AFP

Markets continued their momentum and gained ground this week as well. They gained on three of the five trading days and the BSESENSEX was up 313.07 points or 0.83% at 37,869.23 points. NIFTY was up 68.70 points or 0.60% to close at 11,429.50 points. The broader indices saw the BSE100, BSE200 and BSE500 gain 0.54%, 0.48% and 0.40% respectively. BSEMIDCAP was up 0.02% while BSESMALLCAP lost 0.29%.

The top sectoral gainer was BSECON DUR up 2.62% followed by BSEBANKEX 2.11% and BSEMETAL 1.65%. The top loser was BSEHEACARE down 2.95% followed by BSECAPGOOD 1.19% and BSEOIL&GAS 0.73%. In individual stocks the top gainer was ICICI Bank up 7.12% followed by Eicher Motor 7.03% and Axis Bank 6.71%. The top loser was Lupin down 9.65% followed by GAIL 6.95% and Sun Pharma 5.64%. The Indian Rupee lost 32 paisa or 0.22% to close at R68.83. Dow Jones lost 149.44 points or 0.59% to close at 25,313.14 points.

Trouble for Turkey
Turkey is the latest in the line of fire of the United States. Because of the same the country is in a financial crisis and the currency had depreciated sharply. Interestingly, Turkey was a close ally of the US and one wonders what message the rest of the world should take from this.

The week is a short time and many developments have taken place. In a completely surprise development Jet Airways deferred its results on the day they were to be declared. The Deputy Managing Director of HDFC Bank, Paresh Sukhthankar has quit. He was there since the inception of the bank. One wonders what transpired with Aditya Puri due for retirement in some time.

SEBI has asked the holding company of Vakrangee Limited to make an open offer for violation of the 25% holding rule. The open offer would have to be at the price prevailing in June 2013 and would include interest at 10% to those shareholders who held shares at that time and continue to hold shares even today. While the original shareholders may not be there as the price moved from R30 to R515 and is now currently at R63. Rough estimates say that the open offer price would be around the R170 mark and one could be sure that investors would be more than willing to tender, in case the open offer is made. Knowing the promoter group, one could be sure that they would contest the same and go to the tribunal for appeal rather than make the open offer.

In primary market news, the IPO from HDFC AMC had a stellar debut and gained 65% on day one. Shares which were issued at R1,100 gained R715, but by weekend they had lost some of the gains and closed at R1,749.30, a gain of R649.30 or 59.03%. The IPO from microfinance company Credit Access Grameen Limited which had opened and closed during the week was subscribed 2.21 times. The IPO which consisted of a fresh issue and offer for sale saw QIB's subscribe 5.52 times, HNI undersubscribed at 0.98 times and Retail undersubscribed at 0.88 times. Probably the block buster IPO from HDFC AMC changed people's expectations and that caused poor subscription for the issue.

Mid-week break
After two trading days we have a holiday on Wednesday, August 15, because of Independence Day. The Prime Minister would launch the election campaign of the ruling party for the upcoming general elections of 2019 due in May. Post this holiday we would have two more trading days and one can be sure that they would be volatile.

Markets saw the BSESENSEX make yet another lifetime high of 38,076.20 and NIFTY of 11,495.20 points. During the last few weeks we saw the historical July rally play out on expected lines. Similarly, new high on the benchmark indices were made and one also saw the beaten down midcap and Smallcap stocks rally. Momentum is creeping in and global cues worsening. Time is now getting ripe to exit the market and await the inevitable correction which must follow suit. This time around the correction would be deep, sharp and swift. It's best to sit out the fall after having cashed out and then cherry pick when the markets are down and under.

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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