Off to a flier

Muhurat trading on at Bombay Stock Exchange. Pic/Suresh Karkera

Trading for Samvat 2075 began on a promising note and BSESENSEX gained 245.77 points or 0.70 per cent to close at 35,237.68 points. NIFTY gained 68.40 points or 0.65 per cent to close at 10,598.40 points. Trading for the New Year is more symbolic in nature and consists of one-hour trading for the new calendar year.

A look back
What did Samvat 2074, the year gone by have? It was a mixed bag and was extremely volatile right through. BSESENSEX began trading at 32,389 points on October 17, 2017. It made a high of 36,443.98 points on January 29, 2018 and then slipped all the way almost to where it all began, to 32,483 points on March 23, 2018. From there we had a strong sustained rally to 38,989.65 points on August 29. It was downhill again and a late recovery over the past 10 days saw the BSESENSEX close at 34,991.91 points, a gain of 2,601.95 points or 8.03 per cent.

Rise and fall
NIFTY similarly began at 10,234.45 points, made a January high of 11,171.53 points and then fell to 9,951.90 points in March. The high in August was 11,760.20 points. The closing of NIFTY as of November 6, the last trading day of the previous Samvat was 10,530 points, a gain of 295.55 points or 2.88 per cent. Other benchmark indices ended in the red with BSEMIDCAP down 1,386.41 points or 8.60 per cent down. BSESMALLCAP lost 2,650.7 points or 15.53 per cent and Bank NIFTY was down 952.40 points or 3.86 per cent. Clearly, BSESENSEX was the out performer and investors who have a long-term view lost out in the volatile market. On the other hand, traders had a good time with huge volatility which took place.

The year was marked with huge developments which included the Nirav Modi scam involving Punjab National Bank, the ILFS default and many companies on the bourses getting hammered for various reasons. Yes Bank, Dewan Housing, India Bulls, Manpasand Beverages, P C Jewellers, Vakrangee and InfiBeam are some of the names which come to mind. These shares have seen significant reduction in their market price.

Global cues views
What does Samvat 2075 have in store for markets? We have state elections due in December 2018 and general elections in May 2019. The outcome of these elections is not yet known, and markets would take them in their stride as and when they happen. Global cues are worrisome with US president Donald Trump and his one-man army approach rattling the world. Trade war with China is hurting the world and the US citizen. While crude prices have softened in the past fortnight, they are a concern with sanctions on Iran kicking in. I believe share prices are the lowest when there is uncertainty and no clarity on impending events. This is the time to build a portfolio with a three to five-year horizon.

The introduction of GST and then E-way bill will go a long way in ensuring better compliance and plugging evasion of accountability. This will bring the unorganised trade to organised levels and ensure accountability. Irrespective of the outcome of the elections in May 2019, these are irreversible changes which have been made. I suggest that people start building portfolios with a three to five-year horizon and due it over the next four to six months. One should expect this portfolio to appreciate significantly and I would not be surprised if it more than doubles. Wishing everybody a happy and prosperous New Year.

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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