30 January,2017 10:12 AM IST | | Arun Kejriwal
Press the caution button, though expectations high in budget run-up
Protesters gather to denounce President Donald Trump's executive order that bans certain immigration, at Dallas-Fort Worth International Airport. Pic/Getty Images/AFP
Protesters gather to denounce President Donald Trump's executive order that bans certain immigration, at Dallas-Fort Worth International Airport. Pic/Getty Images/AFP
The markets were booming last week and registered sharp gains even though they were open for just four trading days. The BSESENSEX gained 847.96 points or 3.14 per cent to close at 27,882.42 points. NIFTY gained 291.90 points or 3.50 per cent to close at 8,641.25 points. The broader markets saw the BSE100, BSE200 and BSE500 gain 3.56 per cent, 3.50 per cent and 3.46 per cent respectively. BSEMIDCAP was up 3.03 per cent while BSESMALLCAP was up 2.75 per cent. The markets have crossed the level of November 8 2016, which was the day that demonetisation was announced. These levels were 27,591.14 on the BSESENSEX and 8,543.55 on the NIFTY.
The top sectoral gainer was BSEMETAL up 5.93 per cent followed by BSECONDUR up 5.55 per cent and BSEPSU 5.46 per cent. There were no sectoral losers and the least performing was BSEIT up a mere 0.53 per cent. In individual stocks, the top gainer was HDFC up 10.83 per cent. Hindalco 11.23 per cent, SAIL 9.10 per cent and Kotak Mahindra Bank 8.64 per cent gained. Losers were led by Infosys down 0.70 per cent and Sun Pharma 0.19 per cent.
Stumped by Trump?
The Indian Rupee gained 14 paisa or 0.21 per cent to close at R 68.04. Dow Jones finally crossed 20k and during the week gained 266.53 points to close at 20,093.78 points. Donald Trump is just about a week old as American President but he seems to be ruffling a lot of feathers. Donald Trump will surely keep the pot boiling and markets will be on tenterhooks as they settle down to understanding Donald Trump.
Follow this fund
In primary market news the CPSE-ETF follow on fund is expected to list on Tuesday, January 31. The fund had received excellent response and allotment would be made to only retail and pension funds. The offer from sale from Asia's oldest exchange BSE Limited received overwhelming support and was subscribed over 51 times. The retail portion saw subscription from 11.95 lakh applicants, which is a new record beating the previous one set by L&T Infotech last year when they received 10.90 lakh applications. BSE is expected to list on Friday.
Permitted to trade
Shares of BSE Limited would list on NSE as self-listing is not permitted. However there is a category known as permitted to trade category where shares are traded and there is no obligation or responsibility of the company or the exchange in terms of disclosures and reporting which is allowed. If one goes back to the time when NSE began operations, they had this category of permitted to trade. Shares of BSE would be listed on NSE but would also trade on BSE.
The strong rally in the markets has caught many by surprise including me. Couple of factors which could be attributed are the results for the quarter where the apparent effect of demonetisation seems missing. Secondly, the fact those FIIs who were sellers for quite some time are now buyers and seem to have changed their mind for sure. The January series futures expired on an extremely positive note at 8,602.75 points. A series gain of 499.15 points or 6.16 per cent. It was a very solid performance by NIFTY and a decent part of the gain came in the last three days.
Patience will pay
The Union Budget will be presented on February 1. This year onwards there is no separate railway budget and it will be part of the main budget. The elections to five states begin on the coming weekend. It is believed that this budget would look to raising the tax slabs and also some cuts in income tax rates.
Also central outlay for schemes like MNREGA and spending on rural infra would be raised. The market hopes that there is no tinkering with long term capital gains tax. One thing likely could be an increase in STT on derivatives and trading while there could be some reduction in STT on delivery.
The week ahead would be volatile. Wait for the budget before taking fresh positions. Trade cautiously.
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.
