Against the odds

The markets have had a great run and even though the correction which is inevitable has begun, the indices do not show the same. The markets corrected themselves on the last two trading days and have been falling.

Just like it was lit up on Diwali last year, things looked bright at the BSE. Pic/Shadab Khan

The gains of the first three days when the markets made new highs saw some gains erased but not enough for indices to close in the negative.

Gains all around
The BSESENSEX gained 388.59 points or 1.49 per cent to close at 27,026.70 points while Nifty gained 132.50 points or 1.67 per cent to close at 8,086.85 points. The broader markets saw BSE100 gain 1.96 per cent; BSE200 gain 2.14 per cent and BSE500 gain 2.23 per cent. The BSEMIDCAP gained 3.98 per cent and BSESMALLCAP gained 3.53 per cent.

The top sectoral gainer was BSECONDUR up 5.22 per cent followed by BSECAPGOOD 3.40 per cent and BSEIT 3.16 per cent. There was just one loser in BSEFMCG down 0.58 per cent. In individual stocks Bharti Airtel gained 8.34 per cent, Cipla 8.36 per cent, NMDC 8.69 per cent and Titan Industries 6.72 per cent. On the losing side BHEL lost 7.12 per cent followed by HDFC 1.68 per cent and Hindalco 1.38 per cent.

Shares of beleaguered company Bhushan Steel embroiled in the PSU bribery scam made a bottom and reversed. The shares had been falling from R 400 and made an intra-day low of R 86.95 and reversed. The share closed at R 105.85 up 4.44 per cent.

International affairs
In global cues, Dow Jones gained a tad closing at 17,137.36 points, a gain of 38.91 points or 0.22 per cent. The ECB (European Central Bank) reduced key interest rates to an all-time low of 0.05 per cent. FII's were buyers in the week gone by and invested R 4,786 crore while domestic institutions were sellers of R 401 crore equity. The Indian rupee gained 11 paisa or 0.18 per cent to close at R 60.39.

The week ahead has the Supreme Court continuing the coal block allocation hearing on September 9. The government told the court that they are open to cancelling all coal blocks and having them auctioned but would like some 40 odd blocks where development has taken place to have miners allowed. The court has asked the government to submit names and reasons. Hopefully, there will be clarity soon.

After Japan, it is Australia as the civil uranium deal has been signed which allows Indian nuclear plants to access uranium from Australia. Seeing the change in working under the new regime at the centre it appears that there are many countries favourably inclined to do business with India.

Driven by success
After the success of Snowman Logistics in the primary market, this week sees the IPO from Sharda Cropchem which is in the business of agrochemicals. This is an offer for sale where the promoter and the Private Equity investor are selling 2.25 crore shares in a price band of R 145-156. The issue would raise R 166-181 crores at the lower and upper price band.

Readers would do well to try their hand at a lottery and apply for minimum 90 shares by investing R 14,040. All allotment would happen by lottery for a maximum of 90 shares as per the subscription expected. I believe the issue offers scope for appreciation in the short and medium term.

In the last 12 months, the market has by and large moved up by about 50 per cent. Every other share has doubled if not more. For people who were convinced and put money in the markets, they made huge returns. The markets have made money but making money henceforth may not be as easy.

The fundamentals are showing signs of improvement but the performance of companies always happens with a lag. Some signs of better performance are likely when results for July-September quarter are available in the next four weeks. It maybe early days but certainly indications would be available. Till then, the possible triggers for the market could be global cues if any or policy statements from the government back home.

In these four weeks, markets are expected to consolidate and we could see correction of 5-7 per cent on the benchmark indices. While buying into correction is warranted trying to make money shorting the market may not be a good idea. Allow the markets to correct and consolidate and always remember that when markets fall, buyers vanish.

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 https://ak57.in

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 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.