Level heads needed

Jun 22, 2015, 08:05 IST | Arun Kejriwal

Play it cool and look sharp, is the message amongst much to cheer about, thanks to the rains

The markets had a great last week and a good thing happened, it rained. The weather gods were kind and the markets just lapped it up. We had gains on every single day of the week and the BSE SENSEX closed at 27,316.17 points, up 890.87 points or 3.37 per cent. NIFTY gained 242.05 points or 3.03 per cent to close at 8,224.95 points.

Floods also mean fun and don’t the markets and these youngsters know that
Floods also mean fun and don’t the markets and these youngsters know that

The broader markets saw BSE100, BSE200 and BSE500 all gain similarly at 3.15 per cent, 3.17 per cent and 3.17 per cent respectively. BSEMIDCAP and BSE SMALLCAP gained 3.61 per cent and 3.49 per cent. The top sectoral gainer was BSE OIL&GAS up 4.99 per cent followed by BSE AUTO 4.87 per cent, BSECONDUR 4.66 per cent and BSE HEALTHCARE 4.48 per cent. There was just one loser in BSE REALTY down 0.15 per cent.

In individual stocks, the top gainer was Reliance Industries up 12.15 per cent followed by Mahindra and Mahindra up 9.45 per cent. Other gainers included IOC 8.78 per cent and ONGC 6.16 per cent. Losers were led by Vedanta Limited which was renamed from Sesa Sterlite Limited down 4.73 per cent. Other losers were Tata Power 0.62 per cent and NTPC 0.37 per cent.

Dow Jones gained 117.15 points or 0.65 per cent to close at 18,015.95 points. The Indian Rupee recovered to gain 47 paisa or 0.73 per cent to close at Rs 63.59. FIIs continued to be sellers and sold shares worth Rs 2,650 crore, while domestic institutions bought shares worth Rs 3,500 crore.

In the last couple of months it is seen that domestic institutions are a step or two ahead of FIIs and are buying more than what they are selling. The Greece crisis continues to haunt domestic markets. The FED in its meeting, kept rates unchanged but the minutes indicate or there is a sense of feeling that rates could begin to rise post the next meeting in six weeks’ time.

There is an IPO opening on Wednesday, June 24 and closing on Friday, June 26. Manpasad Beverages Limited make of fruit drinks is tapping the markets to raise Rs 400 crore, in a price band of Rs 290-320. The company has reported sales of Rs 240 crore for the nine month period ended December 2014 and a net profit of Rs 12.7 crore.

The fruit drink season in India is by and large the first half of the calendar year, and comes to an end once the monsoon begins. The company has been reporting an exceptional growth rate and is expanding its footprint. The issue needs to be looked at even though at a first look valuations discourage you. Keep an eye on subscription levels of QIBs who have to subscribe to 75 per cent of the issue before taking a final call.

The markets are, post the excellent advancement of monsoon expecting a rate cut sooner than later. The government has announced higher MSP (Minimum Support Price) for food grains for the current season but with inflation under check it is unlikely to have any major impact.

Expiry for the June series would be happening in four days’ time on Thursday, June 25. The present value of NIFTY of 8,224.95 points is lower by 94.05 points or 1.13 per cent than the level at which May series expired but with the momentum in favour of bulls they would attempt to level the series and add gains if possible.

The key drivers for the week would be cues from Europe, particularly Greece. Any positive news would act as a trigger while the worst is already factored in. Advancement of monsoon would be a big factor domestically and if what we are experiencing in Mumbai is any indicator, things are on track.

With expiry four days away, everything is in place for an action packed week. Play the markets with a level head as the rally has been sharp and a large amount of short covering done. Only positive news flow will keep markets going.

Arun Kejriwal is founder of the Mumbai-based advisory firm Kejriwal Research & Investment Services Pvt Ltd. Readers are invited to read more about these and other issues on his website http://ak57.in

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