Action gets traction

J&K Governor Satya Pal Malik meets Union Minister for Finance and Corporate Affairs Arun Jaitley, in New Delhi. Pic/PTI

It was an eventful week where we had a little of everything. We saw losses for the first two days, the gains for the next two days and finally Friday was a flat day. In the end we saw BSESENSEX gaining 62.53 points or 0.17% to close at 35,871.48 points. NIFTY gained 67.25 points or 0.63% to close at 10,791.65 points. The broader market saw BSE100, BSE200 and BSE500 gain 0.82%, 0.91% and 1.02% respectively. BSEMIDCAP fared better gaining 1.64% while BSESMALLCAP was up 2%.

The top sectoral gainer was BSEMETAL up 6.55% followed by BSEREALTY 4.40% and BSEOIL&GAS 4.29%. The top loser was BSEIT down 1.74% followed by BSETECK 0.95% and BSEFMCG 0.13%. In individual stocks the top gainer was Vedanta up 14.82% followed by ONGC 9.96% and Indian Oil 8.53%. The top loser was TCS down 5.17% followed by Kotak Bank 3.35% and Tata Power 3.10%.

Dow Jones gained 148.56 points or 0.57% to close at 26,031.81 points. The Indian Rupee gained 8 paisa or 0.11% to close at R71.11. This was the first Friday after five consecutive weeks when a NIFTY stock was not hammered. In earlier weeks, Yes Bank, Dr Reddy's, Sun Pharma, Zee Entertainment and Tata Motors were hammered black and blue on Friday. This would dampen the market sentiment as well. This time around markets held up quite nicely as there was no such pressure on any one NIFTY stock.

The Supreme Court has come down strongly on Anil Ambani and threatened to hold him in contempt of court if he does not pay the amount to Ericsson in the next four weeks. The easiest deal that can be done is selling the stake that Reliance Capital holds in Reliance Nippon Asset Management Company Limited.

This stake at current market prices would fetch Reliance Capital about R5,000 cr. The current market capitalisation of Reliance Capital is R4,138 cr as of Fridays closing price of R163.75 on BSE. A point to be noted is than Nippon is an equal stake partner in the company and is also managing the company on a day-to-day basis. This ensures that no due diligence is required for buying the additional stake.

The week ahead sees February futures expire on Thursday, February 28. The current value of NIFTY is lower by 39.30 points or 0.36%. In January Futures had expired at 10,791.65 points. With hardly any pressure now on the bulls and the series virtually flat, things could go either way. However with the way the markets fared last week, it appears the bulls have the edge.

The strategy going forward would be to buy select stocks as the valuation looks more than attractive. Some of the PSU stocks seem excellent investments at current prices. If one is not confident of buying a stock, a good alternative would be to buy the two ETF's of PSU entities. CPSE ETF and Bharat 22 would be excellent bets in the current market where these shares have been hammered to prices which are less than intrinsic value of the underlying stocks. While markets would be volatile in the coming week with expiry in four days' time, they would trade with an upward bias. Trade stock specific and look to buy at dips.

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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