And the climate at D-Street...

It is tough and it is important, but with the Federal Reserve outcome a key driver, stay strong this week

Markets continued to be negative and fell on four of the five trading sessions. The one day they rose, there was significant gain with the Sensex rising 216 points but to no avail. It only reduced the deficit for the week.

Foreign Affairs Minister and President-designate of COP21 Laurent Fabius (c), raises hands with Secretary General of the United Nations Ban Ki Moon (2l) and France’s President Francois Hollande (r) after adoption of a historic global warming pact at the COP21 Climate Conference in Le Bourget, north of Paris. Pic/AFP

Sensex lost 593.68 points or 2.32 per cent to close at 25,044.43 points and briefly fell below the 25K mark on Friday. Nifty lost 171.45 points or 2.20 per cent to end at 7,610.45 points and here it went below the 7,600 mark briefly.

The broader markets lost more with BSE100, BSE200 and BSE500 losing 2.41 per cent, 2.48 per cent and 2.47 per cent respectively. BSEMIDCAP lost 3.28 per cent while BSESMALLCAP lost 2.98 per cent.

In sectoral gainers, there was just one in BSEIT which gained 0.54 per cent. The only other one which came close to be a gainer was BSETECK which lost a tad at 0.03 per cent. Losers were led by BSEMETAL and BSEREALTY which lost 5.18 per cent apiece.

Loser list
Other losers included BSEPSU 4.59 per cent and BSEAUTO 3.56 per cent. In individual stocks, the top gainer was TCS up 2.45 per cent followed by NTPC 1.45 per cent, Hindunilever 0.74 per cent and HCL Tech 0.48 per cent.

The losers were led by Cairn India 9.80 per cent and followed by Vedanta 9.00 per cent and Coal India 8.18 per cent. PSU banks lost sharp ground with Union Bank down 19.40 per cent, Bank of Baroda 12.15 per cent, Canara Bank 11.70 per cent and PNB 11.55 per cent.

FIIs have been sellers in the current month and for the year 2015, their net purchases have fallen below the $ 10,000 crores mark. The way things are going, the figure could end up at an insignificant 1 or 2 billion dollars at best at calendar year end.

On the other hand, domestic institutions have been big buyers, and, are currently with about three weeks to go for year-end have bought shares worth R 68,000 crores or close to 11 billion dollars. It’s a positive sign and we have a ready answer to the question what if FII’s sell.

Reversal
Dow Jones had a reversal last week with markets falling sharply on Friday. Dow lost 582.42 points or 3.26 per cent to close at 17,265.21 points. The Indian rupee lost 19 paisa or 0.28 per cent to close at R 66.88. The US Federal Reserve meets tomorrow and day after.

It is widely expected to raise rates by 25 basis points after almost seven years. While the rate increase is largely factored in, markets globally could make a bottom to coincide with this increase. Hopefully, markets should consolidate post this event.

The climate resolution was adopted in Paris over the weekend. India has signed a number of agreements with Japan including the civil nuclear agreement. While the Paris and Japan deals are good news, the fact remains that Parliament continues to be log-jammed and the way the principal opposition party is behaving is a cause for concern.

Whether any legislation will take place or not one is not sure, but it sure puts the country and its politicians in poor light. SEBI chief U K Sinha at the CII meet on corporate governance spoke about the high commission rates charged by the mutual fund industry. He said that they were in dialogue with AMFI about the same.

He also mentioned that in case the same is not cut, they may have to take action accordingly. This comes on the back of the recent meet where the SEBI chief had said that he would be quite happy if retail investors came to the primary and secondary market via the indirect route of mutual funds.

The two primary market issues from Dr Lal Pathlabs and Alkem Laboratories which had opened last week received excellent response and were heavily subscribed. The grey market premiums are active and at levels of about 23-25 per cent of the offer price.

Year end
Markets are coming to the end of the year and are negative by about 10 per cent. The Sensex had closed the calendar year 2014 at 27,499.42 points and are currently down by about 2,450 points.

While the economy is showing some green shoots, the same is not yet reflecting in positive results from corporate India. Hence, the poor performance at the bourses. Also, the lack of any meaningful action by our Parliament in enacting important reforms is hitting market performance.

A tough and important week lies ahead with the Federal Reserve outcome, a key driver for markets. The rate hike already factored in, a knee jerk reaction and markets bottoming out is a possible outcome. Use continued weakness to enter the market, but, refrain from trading.

Arun Kejriwal is founder of the Mumbai-based advisory firm Kejriwal Research & Investment Services Pvt Ltd. Readers are invited to read more about these and other issues on his website https://ak57.in

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 and under no circumstances should be used for actual trading or making investment decisions.

Readers must consult a qualified financial advisor prior to making any actual investment or trading decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at his or her risk.

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