Liquidity diet

Prime Minister Narendra Modi is being shown the way by Chinese President Xi Jinping during a meeting in Hangzhou China yesterday PicPTIMarkets gained on four of the five trading days last week and made a new high for the calendar year The correction which was expected did not materialise and we saw a fresh breakout instead The markets need to continue to gain ground if the momentum is to be sustained The BSE SENSEX gained 74986 points or 270 per cent to close at 2853211 NIFTY gained 23710 points or 2775 to close at 880965 points The broader market saw BSE100 BSE200 and BSE500 gain 240 per cent 230 per cent and 224 per cent BSEMIDCAP gained 178 per cent while BSESMALLCAP gained 126 per centAbout gainsIn sectoral gainers the top performer was BSE AUTO up 506 per cent followed by BSE BANKEX 363 per cent and BSE CAPGOODS 291 per cent The losers were led by BSE REALTY down 173 per cent followed by BSE TECK 042 per cent In individual stocks the top gainer was Tata Motors up 916 per cent followed by Hero Moto 790 per cent ICICI Bank 656 per cent and HDFC 519 per cent The losers were led by Bharti Tele 731 per cent and followed by Wipro 135 per cent and TCS 062 per centThe Indian Rupee gained 24 paisa or 036 per cent to close at Rs 6682 Dow Jones gained 9626 points or 052 to close at 1849166 pointsTerrific TelecomReliance Jio announced a sharp cut in data charges and the same shook its listed competitors Bharti Tele lost Rs 2515 or 731 per cent to close at Rs 31895 while Idea lost Rs 990 or 1054 per cent to close at Rs 8405 Reliance Industries itself was a minor loser down 146 per cent at Rs 1013 on concerns of there being execution risk Competition is always good for a consumer and things could never be better on the telecom frontShares of RBL Bank Limited listed on Wednesday August 31 and had a great debut gaining Rs 7450 or over 33 per cent The issue had received excellent response and was oversubscribed 6962 times overall with HNI portion subscribed 198 times The cost of funding was Rs 42 which means all HNIs have made money Things could not have been better for them and money making seems to have become easy This is a worrying sign but one must enjoy the party as long as it lastsWho knowsThe US Fed needs to raise interest rates sooner than later but whether it would bite the bullet is a difficult question Secondly with Presidential elections due in November or a mere two months later the FED may decide to hold for two months before taking a call The rise of interest rates would have some bearing on the easy liquidity which global markets are currently seeingWe will see two IPO bound companies organising roadshows in connection with their IPOrsquos GNA Axles Limited and LampT Technologies Limited While GNA Axles is the largest player in its segment LampT Technologies even though it is in the niche technology space is part of a crowded IT market which is currently facing slowdown pressure The poor performance of the recent LampT Infotech which continues to trade below its issue price would add to the pressure on the new issueCaution advisedThe market mood and sentiment has undergone a sea change in the last week and is currently exuberant While it would be out of place to suggest a correction in such a scenario one needs to be cautious as the market is gaining ground without news flow The one and only factor driving the market is liquidity It is time to be cautiousKeep your fingers crossed hope for the best and play the market on a daily basis We have a festival holiday today for the markets reducing it to a four day week There is every possibility then of an increase in volatilityArun Kejriwal is founder of the Mumbaibased advisory firm Kejriwal Research amp Investment Services Pvt Ltd Readers are invited to read more about these and other issues on his website httpak57inDisclaimer 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 and under no circumstances should be used for actual trading or making investment decisions Readers must consult a qualified financial advisor prior to making any actual investment or trading decisions based on information published here Any reader taking decisions based on any information published here does so entirely at his or her risk