Fears ease, rains please

Jul 04, 2016, 10:28 IST | Arun Kejriwal

It has been great going globally, yet right now stick to the sidelines for safety

Stock markets globally had a great week and initial fears of BREXIT seem to be easing off. In India, the monsoon has really picked up and a better than expected monsoon is on the cards. The BSE SENSEX gained 747.20 points or 2.83 per cent to close at 27,144.91 points while NIFTY gained 239.75 points or 2.96 per cent to close at 8,328.35 points. Both the indices hit new highs during the current calendar year.

The monsoon picks up pace and with it investor confidence. Pic/Datta Kumbhar
The monsoon picks up pace and with it investor confidence. Pic/Datta Kumbhar

The broader markets saw BSE100, BSE200 and BSE500 gain 3.43 per cent, 3.55 per cent and 3.73 per cent respectively while BSEMIDCAP gained 4.81 per cent and BSESMALLCAP 5.38 per cent. The top sectoral gainer was BSEREALTY 8.36 per cent, BSEOIL&GAS 6.48 per cent and BSECAPGOOD 6.12 per cent. The losers were led by BSEIT, down 1.31 per cent and followed by BSETECK 0.21 per cent. In individual stocks, the top gainer was Vedanta up 14.67 per cent, followed by DLF 13.63 per cent, Indian Oil 13.04 per cent and BHEL 11.54 per cent. Dr Reddy gained 10.38 per cent while REC was up 10.53 per cent. Losers were hard to find. TCS lost 2.685 followed by Infosys, down 1.92 per cent.

Dow wow
Dow Jones gained 548.62 points or 3.15 per cent to close at 17,949.37 points. The Indian rupee gained 64 paisa or 0.94 per cent, to close at 67.32. June futures ended with gains of 218.10 points or 2.70 per cent at 8,287.75 points. Almost all these gains came in the last week. It seems strange that same time last week, people were worried about BREXIT, while this week it appears that nothing like that ever happened. While it may sound nice to wish away the event, the repercussions will emerge sooner than later.

Bill power
The monsoon session of Parliament begins on Monday, July 18. It is widely believed that the government has the numbers to put the GST bill through this time. It would be a huge achievement, and, would help improve the credibility of the government by leaps and bounds. There are many other legislations which would see the light of day this session. Central government employees were given a pay hike, and this would reflect in increased spending in the coming months. With the monsoon now on track, rural spend will pick up in a big way, spurring demand, and, therefore growth.

Primary focus
The primary market saw the listing of Mahanagar Gas Limited on Friday. The offer for sale at Rs 421 saw the shares gain about 23.49 per cent and close at Rs 519.90. Investors who were lucky to get allotment as the issue was oversubscribed have made attractive gains. The other IPO from Quess Corp Limited received unprecedented response. The overall issue was subscribed 144.50 times with the QIB portion subscribed 59.03 times, HNI portion 392.21 times and retail portion 34.08 times. In terms of applications, the issue received 7.30 lakh applications and the retail portion in terms of applications, was subscribed 26.04 times. This effectively means that one out of every 26 applicants would be successful in getting allotment. The primary market is becoming vibrant, and one hopes that pricing remains attractive, to draw responses from the market.

World view
This week would be driven by global news. The US observes a holiday on account of their Independence Day on Monday. News about Britain looks to dominate the market in the absence of US news. The market has had a splendid run in the last few weeks and for the one day knee jerk reaction to BREXIT have been on a roll. While optimism and expectations have risen significantly, reality is some distance away, and it would be prudent to book some profits and stay on the sidelines before re-entering the market. Opportunities would be available later, which could happen towards the middle of the coming week itself. Volatility is likely to dominate the market place.

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.

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