Clouds begin to part

After four consecutive weeks of losses, the benchmark indices gained and the mood seemed to have turned for the better. How long this lasts is anybody's guess but we have events coming up which could ensure that things remain better for some longer time.

So we hope as the Sensex has been reacting badly to news of a weak monsoon forecast. Pic/Nimesh Dave

The Sensex gained 408.31 points or 1.62 per cent to close at 25,610.21 points and Nifty gained 134.25 points or 1.75 per cent to close at 7,789.30 points. The broader market saw the BSE100, BSE200 and BSE500 gain 1.54 per cent, 1.39 per cent and 1.36 per cent. The BSEMIDCAP gained 1.54 per cent while BSESMALLCAP gained 0.88 per cent.

Ups and downs
The sectoral gainer was BSEAUTO up 3.91 per cent followed by BSEREALTY 3.75 per cent, BSECAPGOOD 3.36 per cent and BSEPOWER 3.23 per cent. The losers were led by BSECONDUR down 1.31 per cent, closely followed by BSEFMCG 1.30 per cent and BSEHEALTHCARE 1.26 per cent.

In individual stocks, SAIL gained 8.15 per cent followed by Tata Motors 7.03 per cent and Maruti 6.09 per cent. In other stocks, Yes Bank gained 10.07 per cent. The losers were led by Hind Unilever down 4.22 per cent followed by Coal India 3.72 per cent, Lupin 2.58 per cent and Indianoil 2.06 per cent.

Dow Jones gained 330.71 points or 2.05 per cent to end at 16,433.09 points. The Indian rupee lost 8 paisa or 0.12 per cent to close at Rs 66.54. FIIs were sellers of Rs 1,900 crores while domestic institutions were buyers of Rs 2,000 crores. The Prime Minister met captains of Industry and asked them to step up their investments in the country.

The demand for rate cut has grown louder and with RBI governor urging banks to pass on the rate cuts and they obliging, the stage is set for a rate cut this time around on September 29.

FED meeting
The index of industrial production or IIP for July was better than expected and came at 4.2 per cent. This would also give further boost to the rate cut demand. The US FED meets tomorrow and day after i.e. on Tuesday and Wednesday for the policy meet and some outcome on rate increases would emerge from the same.

Even if the rate increase does not happen this time there would be a time frame announced post the meet is the wide expectation. Our markets are closed the following day on account of Ganesh Chaturthi which makes Friday a day when markets would open with a big gap, upward or downward only the FED knows.

News from the primary market is a mixed bag where we saw three issues list during the last week. Navkar Corporation closed with gains of 5.16 per cent. This share saw HNI's withdrawing their applications post bidding and their bucket which was subscribed 90 per cent was reduced to mere 30 per cent.

SEBI action
This gave a substantial higher allocation to retail bidders as the unsubscribed portion was transferred to the retail segment. This matter needs to be investigated as withdrawal of forms or the fact that funds were not available for blocking is simply not allowed. SEBI needs to act quickly to keep the sanctity of capital markets.

The second issue was from Shree Pushkar which closed with gains of 1.69 per cent. The third issue was from Pennnar Engineered Building Systems which was down over 7 per cent. This week will see the listing of the remaining two issues from Sadbhav and Prabhat Dairy.

Though the pipeline is strong there has been a pullback of issues after the lacklustre response to the last 4-5 IPO's. Markets would be choppy and with a mid-week holiday and the FED meeting, they would simply wait for announcements. Use dips to buy fundamentally solid stocks and avoid momentum stocks as the movement in them may be faster than envisaged.

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

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