Plethora of positives and an upward gradient are reasons to smile

Apr 16, 2018, 14:46 IST | Arun Kejriwal

Based on this expectation and the fact that the last financial year saw a sell-off in markets towards the end, is the reason for the upbeat mood in the markets currently

Serbian protestors demonstrate against air strikes in Syria, in Belgrade. The US, Britain and France took military action in response to an alleged chemical attack within Syria. The US markets had reacted to the attack initially. Pic/AFP
Serbian protestors demonstrate against air strikes in Syria, in Belgrade. The US, Britain and France took military action in response to an alleged chemical attack within Syria. The US markets had reacted to the attack initially. Pic/AFP

Markets continued their upward trend and gained for the third week in a row. Yet another way of looking at it is the fact that the change in financial year has brought about a positive trend. BSESENSEX gained 565.68 points or 1.65 per cent to close at 34,192.65 points. NIFTY gained 149 points or 1.42 per cent to close at 10,480.60 points. The broader market saw BSE100, BSE200 and BSE500 gain 1.21 per cent, 1.17 per cent and 1.08 per cent respectively. BSEMIDCAP gained 0.49 per cent while BSESMALLCAP gained 0.55 per cent respectively.

Stock scene
The top sectoral gainer was BSEIT up 4.29 per cent followed by BSEMETAL 3.30 per cent and BSETECK 3.22 per cent. The top loser was BSEOIL&GAS down 1.07 per cent followed by BSEREALTY 0.58 per cent and BSEHEACARE 0.04 per cent. In individual stocks, the top gainer was Hindalco up 9.93 per cent followed by Axis Bank 7.60 per cent and TCS 6.39 per cent. The top losers were the Oil Marketing Companies, where BPCL lost 7.07 per cent, HPCL 6.08 per cent and IOC 5.57 per cent followed by Lupin 3.71 per cent.

Dow track
The Indian Rupee lost 23 paisa or 0.35 per cent to close at R 65.20 to the US dollar. Dow Jones continued its upward journey and was up 427.39 points or 1.75 per cent at 24,360.14 points. Late on Friday evening after markets closed in the US, missiles were fired on Syria to destroy chemicals and facilities used for making deadly chemicals. While Dow futures reacted on Friday night they were back to normal on Sunday at the time of writing this.

Investigations on
Investigation in the ICICI Bank case is on with the brother-in-law and husband of Chanda Kochhar being questioned regularly. The buck does not stop here is becoming more and more clear and there would be serious developments in the coming week. What however is baffling is why the ICICI Bank board gave a clean chit so quickly and without any investigation. In the case of Axis Bank the incumbent CEO Shikha Sharma would be stepping down from the post by the end of the current calendar year. The prospects of the bank being taken over by another bank saw the share price rally significantly.

Losing ground
In primary market news shares of Lemon Tree Hotels Limited listed on the bourses on Monday, April 9. The company had issued shares through an offer for sale at Rs 56. The issue was subscribed by QIBs while HNI and Retail portion was subscribed a mere 12 per cent each. The share closed at R 71.60, a gain of R 15.60 or 27.86 per cent. The share lost some ground during the week and closed at Rs 67.65 up 20.80 per cent. There was no other primary market news other than Lemon Tree. It appears the market conditions seem to have unnerved merchant bankers and promoters alike.

Lost aura
IT major Infosys has declared results for the quarter and year ended March 2018. Its net profit for the year was at R 16,029 crore against R 14,353 crore in the previous year. This includes a write back of Rs 1,432 crore on account of a tax provision made in the US on which they received an advance ruling. The EPS for the year was R 71 against R 62.77 in the previous year. The write back resulted in an EPS accretion of R 5.88 for the year. The company had also done a buyback during the year which resulted in reduction of equity and hence higher earnings. The company has guided for revenue growth of 6 to 8 per cent for next year. What is important to note is that they have decided to sell Kallidus, Skava and Panaya. Panaya was the controversial acquisition during Vishal Sikka’s regime. Infosys results are average. One needs to see higher growth if the company has to regain its lost aura.

The trend
Results season for the quarter has begun and there is lot of expectation of better results this quarter. Based on this expectation and the fact that the last financial year saw a sell-off in markets towards the end, is the reason for the upbeat mood in the markets currently. It appears prudent to ride the rally and use any sharp dips on account of geopolitical tensions as buying opportunities. Ride the trend and allow markets to move on. The only negative for India currently is crude oil prices, which could be a dampener if the upward trend in them continues.

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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