Open throttle season

Union Finance Minister Arun Jaitley at the London School of Economics to speak on ‘Transforming India' in London over the weekend. Pic/PTI

Markets continued their strong showing and gained ground on all four trading days last week. The BSESENSEX gained 424.22 points or 1.49 per cent to close at 28,892.97 points, while NIFTY gained 117.80 points or 1.34 per cent to close at 8,939.50 points. The broader indices saw the BSE100, BSE200 and BSE500 gain 1.27 per cent, 1.22 per cent and 1.20 per cent. BSEMIDCAP was up 0.81 per cent while BSESMALLCAP gained 0.89 per cent. There was no let-up in market momentum whatsoever.

Maharashtra Chief Minister Devendra Fadnavis, Mumbai BJP president Ashish Shelar, Maharashtra BJP president Raosaheb Danve and Education Minister Vinod Tawde celebrating the party's performance in the BMC election. Pic/PTI

The Indian rupee
The Indian rupee gained 18 paisa or 0.27 per cent to close at Rs 66.83. Dow Jones gained 197.71 points or 0.96 per cent to close at 20,821.76 points. Elections to municipal bodies in Maharashtra were held and results showed of course that the Bharatiya Janata Party (BJP) has gained ground all over the State. They have won in eight of the 10 municipalities that went to polls. They were second in Thane and are virtually neck to neck with their estranged ally Shiv Sena in India's richest municipality, Mumbai. Ego is preventing the natural allies from coming together and one is unsure about the final outcome. While BJP will have a positive rub-off in the UP elections with polling for two rounds yet to happen, any adventurism by Congress with a Hindutva party (SS) would go the wrong way. Waiting for UP elections to get over would be too long and a decision will have to be taken in the coming few days.

Watch out for...
February futures expired on a positive note with NIFTY gaining 336.75 points or 3.91 per cent for the month to close at 8,939.50 points. Incidentally, both the benchmark indices BSESENSEX and NIFTY are at 52 week highs and within striking distance of their lifetime highs as well. The momentum will continue next week with support from the primary market. There are two IPOs which would have their roadshows in the coming week. The first issue is from Music Broadcast Limited. The company will raise Rs 400 crore by way of a fresh issue, an offer for sale of 26.58 lakh shares.

The second issue is from Avenue Supermarts Limited promoted by Radhakishan Damani, a stock market tycoon. The company is the owner of D Mart, a supermarket chain. The company will raise R 1,870 crore by way of a fresh issue. There is lot of demand for the issue and the grey market indicates a premium of about 60 per cent to the expected issue price. Very clearly, these two issues will add to the momentum e in the market.

Results of polls
In just under a fortnight, on March 11, results for the five states that went to polls will be announced. The battle is for UP where there are 403 seats up for grabs and clearly the battle is seeing no holds barred. The market momentum is veering around to the fact that they are likely to see an all-time high at around the election results. In case the BJP does well, they would peak post the election results on profit taking. In case they do badly there would be a gap down opening post Holi when markets re-open from the extended weekend.

There are no drivers for the market currently except the results. Valuations have slowly but steadily risen and they are currently more than fairly valued. One could say they are stretched. With primary market likely to add to the momentum and a major event staring us in the face, there is a nice setup for both the bulls and the bears. In any case there would be a rally into the event before profit taking or disappointment takes over. Ride the coming week and use sharp rallies to book profits.

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.