Election action and bitcoin speculation send pendulum swinging
Gold plated souvenir Bitcoin coins. Bitcoin spiked to a dizzying record above USD 15,000 on frenzied speculative buying. Pics/AFP
Markets last week saw all kinds of movements. First, we had a small up day followed by a small down day. Then we had a big fall followed by two days of sharp rise. The BSESENSEX gained 417.36 points or 1.26 per cent to close at 33,250.30 points. NIFTY gained 143.85 points or 1.40 per cent to close at 10,265.65 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.42 per cent, 1.43 per cent and 1.36 per cent respectively. BSEMIDCAP gained 1.68 per cent while BSESMALLCAP gained 1.07 per cent.
Gold plated souvenir Bitcoin coins. Bitcoin spiked to a dizzying record above USD 15,000 on frenzied speculative buying. Pics/AFP
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The top sectoral gainer was BSECONDUR up 2.64 per cent followed by BSEOIL&GAS 2.61 per cent and BSETECH 2.55 per cent. The top loser was BSEIT down 1.32 per cent. There were no other losers but the sector to gain the least was BSEPOWER up 0.26 per cent. In individual stocks, the top gainer was Bharti Tele up 7.98 per cent followed by Hind Unilever 5.65 per cent and GAIL 5.45 per cent. The top loser was Infratel down 2.92 per cent followed by Coal India 2.83 per cent and Hero Moto 2.68 per cent. It is coincidence that both the top gainer and loser are group companies with Bharti being the telecom provider and Infratel being the tower company.
The same
Dow Jones had yet another week of gains and was up 146.54 points or 0.60 per cent to close at 24,329.16 points. The Indian Rupee was steady and gained a paisa or 0.02 per cent to close at R 64.45. RBI held interest rates unchanged on expected lines. There was plenty of news flow with the government superseding the board of Unitech.
The whistle-blower has written to SEBI against the settlement plea of Infosys. All is not well in the case of Infosys and somehow it seems to be battling on too many fronts at the same time. This is affecting the image of the company.
On offer
There were two primary market offerings in the week gone by. The first was from the super speciality hospital chain, Shalby Ltd which raised R 480 crore from a fresh issue and an offer for sale of 10 lakh shares. The price band was R 245 to 248. The issue was subscribed 2.82 times with QIB portion subscribed 4.34 times, HNI portion undersubscribed at 0.42 times and retail oversubscribed at 2.98 times. The HNI portion saw a muted response, because the issue could not be subscribed 50-60 times by this category, and, hence attract margin funding at 1 to 2 per cent margin. This shows that the criteria for HNI funding is not the quality of issue but the rate of margin on borrowing.
Paper caper
The second issue was from Future Supply Chain Solutions Limited which was an offer for sale of 97.84 lakh shares in a price band of R 660 to 664. The issue was subscribed 7.55 times with QIB potion subscribed 12.36 times, HNI portion subscribed 11.15 times and retail portion subscribed 3.26 times. A small IPO opens in the week ahead from Astron and Board Mill Limited. The company is tapping the capital markets with its fresh issue of 1.4 cr shares in a price band of R 45-50 to raise R 70 crore at the top end of the band. The issue opens on Friday, December 15 and closes on Wednesday, December 20.
The shares are being offered at a PE multiple of 14.71-16.34 times its financial year ended March 2017 numbers. The amount to be raised is small compared to the IPO size these days and paper as a sector is seeing traction. The company makes Kraft paper from waste paper. Bitcoin has suddenly become the talking point at almost all forums. The kind of volatility witnessed, where it rose to over 17,154 dollars and then fell to below 14k on the same day, before closing at just a shade over 15k shows the fervour with which this is being traded.
The important news is that Chicago futures exchange would permit futures in Bitcoin effective December 10. This effectively means that if you have a bearish view on this coin, you could henceforth short the same. This would make the kind of volatility witnessed a thing of the past hopefully. RBI has warned people about Bitcoin. The worst thing about it is there is no regulator for the same. Trade at your own peril.
The all-time high on the BSESENSEX was 33,865 points and 10,490 on NIFTY. We are about 2 per cent away from these levels and it is quite likely that they would make a serious attempt to touch them if not cross them in the next six trading days beginning Monday. The end The election results would decide the course the markets take. One thing is quite certain though that if we are to end the current calendar year on a new high it has to happen on December 18. If markets do not do so it would happen at best only next year. On the other hand, if things go wrong with the results as far as the ruling party is concerned than the markets would begin a meaningful correction in the immediate short term.
Rally ride
With so much at stake in the coming week building into the exit poll on Thursday evening, there would be huge volatility without doubt. Ride the rally and use that to book profits. Even after a positive outcome, markets would see sharp profit taking post the results, or, see a sell-off if there are unpleasant surprises. 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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