Ride the rally

Finance Minister Arun Jaitley

It was a topsy-turvy week at the bourses, and even though the ruling party lost the three states of MP, Rajasthan and Chhattisgarh, markets registered gains on a weekly basis. The BSESENSEX gained 289.68 points or 0.81 per cent to close at 35,962.93 points. NIFTY gained 111.75 points or 1.05 per cent to close at 10,805.45 points. The intra-day lows on Tuesday were 34,426 points on the BSESENSEX and 10,333 points on NIFTY. This effectively means that from these lows the BSESENSEX gained 1,540 points while NIFTY gained 470 points. The broader indices saw the BSE100, BSE200 and BSE500 gain 1.42 per cent, 1.58 per cent and 1.70 per cent respectively. BSEMIDCAP was up 3.23 per cent and BSESMALLCAP 2.82 per cent.

The list
The top sectoral gainer was BSEAUTO up 4.51 per cent followed by BSEOIL&GAS 3.42 per cent and BSECONDUR 3.39 per cent. There were no sectoral losers, but the one to gain the least was BSEHEALTHCARE up 0.62 per cent. In individual stocks, the top gainer was India Bulls Housing up 10.27 per cent followed by Indian Oil 9.19 per cent, Yes Bank 8.58 per cent and Hero Moto 8.16 per cent. The top loser was Dr Reddy's down 3.43 per cent followed by Aurobindo 3.32 per cent and HDFC 2.46 per cent.

The Indian Rupee lost Rs 1.10 or 1.55 per cent to close at R 71.90 to the US Dollar. Dow Jones was up on a weekly basis but came under pressure on Friday losing almost 500 points and closed with losses of 288.44 points or 1.18 per cent at 24,100.51 points. The issue of the arrest of CFO and daughter of the Hua Wei boss in Canada and subsequent granting of bail has created a stir. China has subsequently arrested two Canadian nationals and the issue is unlikely to die down soon. The trade wars between China and US have taken a new turn with this development.

A magnet
FIIs are back with their buying ways and are looking at India as they realise that US may not deliver expected returns. Further, the correction in prices and the expected likely improvement in corporate earnings and economic data, make India an attractive destination for overseas investors. The added icing on the cake is the negative mindset of most people and their current short positions. These are enough ingredients to point to a short-term rally in the market place.

With election results behind us it's time to reflect on economic data which has emerged and would emerge in the coming days, weeks and months. 1inflation continues to ease and so does food inflation. This point would certainly be kept in mind when Reserve Bank of India meets for its bi-monthly policy meeting.

Enjoy it
The week ahead is likely to see some consolidation in the earlier part and then see gains in the latter half. In such a scenario, it makes sense to look for stocks which could deliver results and hence profits in the coming quarters. Further, the mood remains confused. People still doubt why such a strong rally happened. They have not realised that shorts which got covered and some fresh buying led to this rally. It would probably take a stronger rally in the next calendar year to happen before people change their view.

December futures expire on December 27 and currently the series is down by 53.25 points or 0.49 per cent. With nine trading sessions to go and the markets getting on the side of bulls, it appears that this would be yet another month in favour of bulls. Ride the rally and enjoy the fruits as it unfolds. Enjoy some profit taking on the way as well.

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.

Catch up on all the latest Mumbai news, crime news, current affairs, and also a complete guide on Mumbai from food to things to do and events across the city here. Also download the new mid-day Android and iOS apps to get latest updates