Bumps on recovery road

TCS Chief Executive Officer and Managing Director N Chandrasekaran has been named Tata Sons new chairman after the unceremonious sacking of Cyrus Mistry PicPTIMarkets gained further ground last but not without hiccups One thing is crystal clear though they gained the momentum seemed to be missing The BSESENSEX gained 47883 points or 179 per cent to end last week at 2723806 points NIFTY gained 15655 points or 190 per cent to end at 840035 points The broader markets saw BSE100 BSE200 and BSE500 gain 203 per cent 197 per cent and 200 per cent respectively The top sectoral gainer was BSEMETAL up 547 per cent followed by BSEPOWER 400 per cent and BSEBANKEX 362 per cent The only loser was BSEHEALTHCARE down 023 per cent Very clearly the gainers outnumbered the losers In individual stocks the top gainer was SAIL up 1098 per cent followed by Hindalco 709 per cent Tata Steel 636 per cent and NMDC 581 per cent The losers were led by Dr Reddyrsquos downed 562 per cent followed by Idea Cellular 528 per cent and DLF 197 per centA Wall Street sign on a sidewalk near the New York Stock Exchange Wall Street opened lower recently but the Dow Jones Industrial Average remained within shouting distance of the 20000 mark PicAFPCompletely flat thisDow Jones was virtually flat losing 7807 points or 039 per cent to close at 1988573 points Clearly 20k is not just a number but is proving to be a real hurdle to cross The markets have spent more than a month above the 19750 level but have failed to close above 20k even once The best they have done so far is 19974 on December 20 Currently the 20k mark is like Mount Everest The Indian rupee lost 19 paisa or 028 per cent to close at Rs 6815This week sees the follow on fund offer of CPSEETF opening for subscription on Wednesday January 18 and closing on Friday January 20 The fund offering is R 6000 crore with a reservation of R1800 crores for QIBs The entire issue thereafter has preference for retail investors Any unsatisfied portion would then be offered to pension funds and thereafter if available to HNIS and QIB Bidders There is a discount of 5 per cent to all categories of investorsStocks that rockThis is a follow on offer and the earlier offer had come in March 2014 and was for 3000 crore and was oversubscribed about 14 times The basket of 10 stocks is the same as last time and is skewed in favour of energy and oil sectors This time this skewed allocation is beneficial as oil prices have bottomed out and are much more stable unlike last time when they were fallingSecondly the fact that there has been a fundamental change in the oil companies post realignment of prices to market driven against the subsidy regime make this basket attractiveThe present price of the earlier fund was Rs 2685 as of Friday January 13 This looks like an attractive investmentA note of caution however is that this being a mutual fund offer the application has to be made by cheque and not ASBA Also there is some paperwork to be completed like lsquoKYCrsquo which needs to be done before submitting the application Do not wait for the last moment for applying in view of these proceduresThe election analysisThe Election Commission has reserved its order in the dispute between the two factions of warring father and son in the Samajwadi party case Looking at the circumstances of the case and the fact that elections to UP begin on February 4 the probable outcome would be a freezing of the cycle symbol with neither faction getting itThis would be a blow to both factions considering that rural India still votes by symbol Who would benefit from this split would be known when results are declared at Holi time in the middle of MarchResults from TCS and Infosys were declared on Thursday and Friday respectively Both shares lost ground on Friday TCS was down on a weekly basis while Infosys was marginally up for the week The sector is under stress and margins are certainly under pressureTatas on trackN Chandrasekaran has been appointed the new chairman of Tata Sons He would take over from February 21 and would have his job cut out in trying to bring about a functional Tata group after the fall out of the ugly Ratan Tata Cyrus Mistry public spat Chandra as he is popularly known was heading TCS and is a Tata cadre with 30 yearsrsquo experience He is young considering he is just 53 and has a long innings ahead of him in his new role One hopes the group gets back to business as usual nowMarkets are going nowhere even though they have gained in the last week Its time to be cautious and wait for triggers before reentering the marketsArun 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