Logic? What's that?

PM Narendra Modi is seen on the television inside a restaurant as he addressed the nation in New Delhi on December 31, 2016. He announced a series of cash handouts, loans and sops while defending his shock cash-ban decision of November 8. Pic/AFP

The year 2016 has finally come to a close. It was a nightmare for logic. No one expected ‘BREXIT' to happen. It did and markets rallied. Donald Trump was considered bad for markets. He was not expected to win either. He did though and US had its best rally in recent times. These are no ordinary times but very challenging ones.

The BSESENSEX gained 585.76 points or 2.25 per cent to close at 26,626.46 points. NIFTY gained 200.05 points or 2.51 per cent to close at 8,185.80 points. The broader markets saw the BSE100, BSE200 and BSE500 gained 2.36 per cent, 2.40 per cent and 2.37 per cent respectively. BSESMALLCAP gained 2.11 per cent whilst BSEMIDCAP gained 2.30 per cent. In sectoral gainers the top performer was CONDUR 3.13 per cent and BSETECK 2.81 per cent. There was just one loser in BSEREALTY down 0.45 per cent. In individual stocks, the top gainer was ITC up 7.18 per cent followed by Hind Unilever 4.47 per cent, HCL Tech 4.16 per cent and Coal India 4.13 per cent. The losers were led by PSU banks Canara Bank down 5.99 per cent, Punjab National Bank 3.63 per cent and Union Bank 2.50 per cent. Other loser included Hindalco down 2.73 per cent.

Under the scanner
Our benchmark indices ended last year with small gains. The interesting part is that they were notched in the last week of last year otherwise they would have been flat. For the record, the BSESENSEX gained 508.92 points or 1.91 per cent for the year at 26,626.46 points. NIFTY gained 239.45 points or 2.93 per cent at 8,185.80 points. (The weekly gain was 585 points on SENSEX and 200 points on NIFTY).

Amongst SENSEX stocks, the top gainer was Tata Steel and the China meltdown in the first week of January 2016 was on account of commodities and the China slowdown. The best performing among sectoral indices was BSEMETAL up 26.82 per cent on a yearly basis whilst the worst performer was BSEHEALTHCARE down 14.79 per cent. The pharma companies were at the receiving end as far as US FDA was concerned and large and even midcap companies were under the scanner.

The Dow Jones lost 171.21 points or 0.86 per cent to close at 19,762.60 points. The Indian Rupee lost 10 paisa or 0.15 per cent to close at Rs 67.92. The markets had a strong rally post the weakness witnessed on Monday. The weakness was on account of the PM talking about the capital markets needing to contribute more to the nation through taxes.

The December series futures expired on a strong note. The series expired at 8,103.60 points, a series gain of 158.10 points or 1.73 per cent at 8,103.60 points.

The Govt has signed a DTAA (Double Taxation Avoidance Agreement) with Singapore. This is the third in the series after similar agreements with Mauritius and Cayman Islands. The Govt has agreed to grandfather investments till March 31, 2019. From April 1 2019 all capital gains would be taxed at 505 of what they are in India. This would be a very positive step as a large amount of investments flows into India from Singapore which is considered a straight forward country. There could be a knee jerk reaction in the short term but this is positive from a long term perspective.

Modi's PM address
The PM Narendra Modi addressed the nation after the 50-day period of depositing demonetised notes expired. While people expected that he would announce some new measures it was all about thanking the people and bearing the pain. Some measures for housing loans, assistance to pregnant women and fixed interest to senior citizens were announced.

Interest subsidy of 4 per cent for loans of up to 9 lakh and 3 per cent for loans up to R12 lakh were announced for purchase of a home or additions/repairs to an existing home. This loan could be from a bank, housing company or an NBFC. Similarly, senior citizens could invest upto R7.5 lakh in a fixed deposit which would bear a fixed rate of interest of 8 per cent for 10 years. The person could withdraw the interest on a monthly basis which means the interest component of 7.5 lakh of R 5,000 could be a source of income for the citizen.

What a drama
For the record the BSESENSEX gained 508.92 points or 1.91 per cent for last year at 26,626.46 points. NIFTY gained 239.45 points or 2.93 per cent at 8,185.80 points. Amongst SENSEX stocks the top gainer was Tata Steel and the China meltdown in the first week of January 2016 was on account of commodities and the China slowdown. The best performing among sectoral indices was BSEMETAL up 26.82 per cent on a yearly basis whilst the worst performer was BSEHEALTHCARE down 14.79 per cent. The pharma companies were at the receiving end as far as US FDA was concerned and large and even midcap companies were under the scanner.

Elections to the largest state of India, Uttar Pradesh are to be held shortly. What happened there in the ruling party is quite amusing and weird. It was nothing short of a staged drama and a handover of baton from the old man to the son. It would be interesting to see what the voter thinks of this high voltage and action charged drama.

The year ahead would be tough initially before growth and reforms take over. Brace yourself for difficult times because it is in such times that value is found. Wishing everybody a happy, prosperous and successful 2017.

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.