Political winds of change blow
The Assembly election verdict in Haryana and Maharashtra, as well as a shorter business week are all set to influence trends at Dalal Street
The week gone by had plenty of action even though it was a short, four day week, with Wednesday being Election Day in Maharashtra and Haryana. The week ahead is even shorter with mere three days of trading and a symbolic Muhurat trading on Thursday i.e. Diwali day.
A BJP worker reacts to the party’s wins in Haryana and Maharashtra. Pic/Bipin Kokate
Results from Haryana, show the ruling Congress has been defeated and relegated to third while BJP has secured a majority. In Maharashtra, the ruling Congress-NCP which split days before elections have been defeated and relegated to third and fourth position.
BJP has emerged as the single largest party, but does not have enough seats to form the government on its own. Markets were volatile last week and global volatility did not help. On Wednesday, Dow intra-day plunged 450 points before recovering 300 points. Dow closed at 16,380.41 points, down 163.69 points or 0.99 per cent.
In India, BSESENSEX lost 188.85 points or 0.72 per cent to close at 26108.53 points. Nifty lost 80.25 points or 1.02 per cent to close at 7,779.70 points. Broader indices saw BSE100 lose 1.00 per cent, BSE200 lose 1.09 per cent and BSE500 lose 1.20 per cent.
BSEMIDCAP lost 1.82 per cent while BSESMALLCAP lost 2.80 per cent. In sectoral indices, the top gainer was BSEBANKEX up 3.09 per cent and the only other gainer was BSEPSU at 0.98 per cent. The top loser was BSEREALTY down 10.20 per cent. The fall was skewed because of DLF.
Other losers were BSEIT down 5.15 per cent, BSECONDUR down 3.22 per cent and BSEOIL&GAS down 1.97 per cent. In individual stocks, top gainers were led by Union Bank up 8.14 per cent, LIC Housing Finance up 6.60 per cent and Axis Bank up 5.99 per cent. Losers were led by HCL Tech down 13.40 per cent and TCS down 8.74 per cent.
In other stocks, Hindalco lost 6.99 per cent while Sesa Sterlite lost 6.81 per cent. SEBI has debarred DLF, its promoters and some key officials from accessing the capital markets over improper disclosures in its RHP at the time of its IPO.
Meanwhile, DLF and its promoters have challenged SEBI action with the tribunal SAT. With Congress ceding control to BJP in Haryana, DLF and controversial land deals will be reopened. DLF was a big loser in the market losing Rs 41.65 or 27.34 per cent to close at Rs 110.70.
The government made a number of changes in labour laws for ‘Make in India’ programme to be workable. Further, the weekend prior to assembly results saw announcements on the petroleum front. Diesel has been deregulated and prices have been cut after five years. The price cut is Rs 3.72 per litre in Mumbai and R 3.37 in Delhi.
This price cut will help tame inflation. Natural gas prices have been increased to $ 5.61 from the $ 4.20 mark with a rider that the same increase would not apply to Reliance’s KG-D6 block which would get the old price of $ 4.2 and the differential paid by the consumer go to an escrow account till details of short production are finally decided.
While there would be an increase in prices of PNG/LNG it would be lesser than what would be charged if gas prices were raised as per the Rangarajan committee. This fall in prices is due to the falling price of crude which is at a four year low.
The open offer from Deepak Fertilisers and Zuari Agro for Mangalore Chemicals was supposed to originally close on Friday, has been extended for one day as the offer was to remain open for 10 days, and Wednesday, was declared a holiday for voting.
Securing the future
It may also be mentioned that there can be no revision in prices and neither of the competing parties are allowed to buy from the market or any bulk/block deal for a period of six months from the closure of the offer at a higher price than the open offer price.
In case they do so, offer a higher price, such higher price would have to be paid to all those who had tendered in the offer price. My advice is, sell Mangalore and buy Deepak Fertilisers or Chambal Fertilisers which are available at cheaper valuations then Mangalore Chemicals.
FIIs continued to be sellers and sold shares worth Rs 3,750 crores while domestic institutions were buyers of shares worth Rs 2,000 crores. The Indian rupee weakened by 9 paisa to close at Rs 61.44. The week ahead has a mere three days of trading and there is plenty of news to which the market has to react. The trend in the medium term is upwards and one needs to look to invest. Trade cautiously, and wishing all readers ‘A Happy Diwali’.
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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