Moody's raises the sovereign rating of the country by one notch

Updated: Nov 20, 2017, 13:43 IST | Arun Kejriwal | Mumbai

Moody's rating dominates week; creates history of sorts

The week gone by consisted of two parts where the first three days of the week saw the correction, and, the last two days saw the recovery. The recovery was helped on Friday with the early morning announcement of Moody's raising the sovereign rating of the country by one notch.

Finance Minister Arun Jaitley. Pic/PTI
Finance Minister Arun Jaitley. Pic/PTI 

Stable able
The earlier rating, which was at Baa3 was raised to Baa2 while the outlook which was at positive was changed to stable. This upgrade has taken 14 years to happen and was last done in the final quarter of Atal Behari Vajpayee's government in 2004.

It figures
The BSESENSEX gained 28.24 points or 0.08 per cent to close at 33,342.80 points. NIFTY lost 38.15 points or 0.37 per cent to close at 10,283.60 points. The broader indices saw the BSE100, BSE200 and BSE500 lose 0.23 per cent, 0.15 per cent and 0.21 per cent respectively. BSEMIDCAP gained 0.66 per cent but BSESMALLCAP lost 0.22 per cent. The top sectoral gainer was BSEREALTY up 2.29 per cent followed by BSEBANKEX 1.10 per cent and BSEAUTO 0.55 per cent. The top loser was BSECAPGOOD down 2.74 per cent followed by BSEMETAL 2.70 per cent and BSEOIL&GAS 1.68 per cent.

Stock talk
In individual stocks, the top gainer was Bank of Baroda, up 7.63 per cent, followed by Tata Power 6.86 per cent and Reliance Industries 2.86 per cent. The top loser was Bharti Infratel down 11.85 per cent followed by Bosch 7.90 per cent and Adani Ports 7.75 per cent. The Indian Rupee gained 15 paisa or 0.23 per cent to close at Rs 65.01 to the US Dollar. Dow Jones was down 63.97 points or 0.27 per cent to close at 23,358.24 points.

Surrender mode
Markets were weak for the first three days and the BSESENSEX had lost 554 points. It gained 582 on the remaining two days and managed to end the week in positive territory. NIFTY on the other hand, lost 203 points in the first three days, and gained 165 on the remaining two days and ended in the red, down 38 points. It is important to note that the intraday gains from the sovereign rating upgrade event could not be retained in full, and the market surrendered a significant portion of the same.

Was oversold
While the intraday gain on the BSESENSEX was 414 points, it could retain just 236 points or 57 per cent of the gains. For NIFTY, the intraday high was 129 points, while the gain retained was 69 points or 53.4 per cent. The case in point is that the markets were oversold and recovered technically on the back of positive news, which may not have the strength to take them forward in the coming days.

Two listings
The week saw two new listings. The first was Khadim's which listed on Monday. The shares which were issued at R 750 slid to R 688.50 on Monday, down 8.20 per cent. By the weekend they were trading lower at 669.75, a loss of R 80.25 or 10.70 percent. The second share to list was HDFC Standard Life Insurance Company Limited which had a dream debut gaining 18.71 per cent at R 344.25. Shares were issued at R 290 and were very well received by institutional investors. The listing was no doubt helped by the change in mood on Moody's upgrade of India's sovereign rating.

Bear fare
Fortunately, there are no IPOs currently and barring one or two that may come it appears they are done with for the remaining part of the calendar year 2017. Hopefully, when they return next year, there would have been a relook at valuations which had touched the roof. The current month seems to be evenly matched as far as November futures are concerned and bulls and bears would have to put in that little extra to win the series. I would like to back the bears and believe they have the edge in the nine trading days remaining for the series.

Remain cool
Markets are likely to remain volatile in the week as well and it would make imminent sense to remain light in commitments towards the markets. Use sharp dips to enter and use rallies to exit as last week offered ample trading opportunities. The current state of the market will throw up many such trading calls for the patient investor.

Arun Kejriwal is founder of the Mumbai-based advisory firm Kejriwal Research & Investment Services Pvt Ltd.

Disclaimer: No financial information 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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