Liquidity is driving factor for current strong showing

Union Finance Minister Arun Jaitley with MoS Santosh Gangwar at the 15th Goods and Services Tax GST meeting in New Delhi PicPTIThe markets continued to be on a roll and make new highs The BSESENSEX gained 24508 points or 079 per cent to close at 3127329 points while NIFTY gained 5840 points or 061 per cent to close at 965350 points The interesting point to be noted is that more than half the gains came on the last trading day of last week The broader indices saw the BSE100 BSE200 and BSE500 gain 068 per cent 090 per cent and 095 per cent respectively BSEMIDCAP gained 194 per cent and BSESMALLCAP gained 149 per centComing out topsThe top sectoral gainer was BSEFMCG up 283 per cent followed by BSEKEACARE 209 per cent and BSECONDUR 160 per cent The top loser was BSEMETAL down 279 per cent followed by BSEPSU and BSEIT at an identical 138 per cent In individual stocks the top gainer was Cipla up 754 per cent followed by Hero Moto 624 per cent and Dr Reddy 587 per cent The top loser was Sun Pharma down 945 per cent followed by BHEL 848 per cent In other stocks DLF lost 954 per cent The Indian Rupee remained unchanged at R 6444 The Dow Jones gained 12601 points or 060 per cent to close at 2120629 pointsEye on monsoonReserve Bank of India RBI meets for its policy review on Wednesday June 7 where it is widely believed that rates would remain unchanged The general feeling is that RBI would wait for the monsoon which has broken over Kerala RBI would track its progress till the next meeting in August before taking any call on interest ratesThe interesting thing in the last week has been that everything connected with monsoon has seen price movement Stocks from the FMCG pack have moved up on the expectation that a good monsoon will see increased consumptionSimilarly some pharma companies which had already declared results saw a rebound as the consumption of drugs moves up during the rainy season Further Hero Motocorp was another big gainer on the back of expected monsoon and favourable impact on rural economy and therefore two wheelersLike we thoughtResult season for the JanuaryMarch period is over and by and large results have been in line with expectations There have been a few surprises pleasant or unpleasant While a clear trend from the results is still not discernible one thing emerges that the worst is more or less behind usArun KejriwalTwo sectors which still seem to be suffering and may have some more time to go are the Information and Technology IT sector and pharmaceutical sector The saving grace for the pharma sector may be domestic sales which are quite strong However the US sales and the African markets have taken a big beating On the positive side we are seeing signs of the PSU banking consolidating It appears the problem of NPAs is easing off or showing signs of reducing stress Some quarters ago it appeared that this was a largely PSU bank issue but with the leading private banks issuing profit warnings and then providing large sums as NPA the problem seems to be with the entire industry This sector particularly the PSU pack looks attractive and merits investment considering the fact that valuations have been beaten down mercilessly over timeGoing great guns The biggest driver in the markets currently is liquidity It seems to be coming in all sizes and just seems unstoppable The same is from domestic funds and foreign funds To add to this is the fact that at every dip there are enough buyers just waiting to enter the market While the market was struggling in the first four days of the week by Friday any talk of correction was convincingly quashed With liquidity and waiting buyers much more needs to happen to bring about a correctionThe primary market seems to have taken a momentary pause There would be the listing of India Grid invit this week Besides this there is no issue planned during the week ahead One issue listed last week in the form of PSP Projects Limited The issue was priced at Rs 210 and closed trading at weekend with gains of Rs 750 or 357 per cent at Rs 21750Ride the rallyIn conclusion currently the markets seem to be very strongly poised and though a correction is overdue it is just not happening Enjoy the rally till the going is good but continue to reduce positions as corrections in such situations are normally very swiftArun Kejriwal is founder of the Mumbaibased advisory firm Kejriwal Research amp 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