Festive cheer is here

Things looking up, after a dark past week with fireworks erupting on Dalal Street pre-Diwali

Diwali visited Dalal Street a week earlier. Markets saw fireworks and the mood which was depressed over the last 50-55 days turned optimistic in the short term. Bears were badly mauled, and you could say it was poetic justice that they were paid back in the same coin. BSESENSEX gained 1,662.34 points or 4.98 per cent to close at 35,011.65 points. NIFTY gained 523 points or 5.21 per cent to close at 10,553 points. The broader markets saw the BSE100, BSE200 and BSE500 gain 5.45 per cent, 5.59 per cent and 5.69 per cent respectively. BSEMIDCAP gained 7.34 per cent and BSESMALLCAP was up 6.38 per cent.

Good showing
The top sectoral gainer was BSECAPGOOD up 10.48 per cent followed by BSECON DUR 8.04 per cent and BSEREALTY 7.75 per cent. There were no sectoral losers this time around but the one that gained the least was BSEFMCG up 2.89 per cent. This gives you an idea of the all-round rally that markets witnessed. In individual stocks, the top gainer was India bulls Housing up 27.17 per cent, followed by Yes Bank 15.98 per cent, State Bank of India 15.05 per cent and Axis Bank 13.51 per cent. The top loser was Coal India down 6.93 per cent, followed by Kotak Bank 2.24 per cent and Bharti Infratel 1.12 per cent.

The Indian Rupee had a good showing and gained 97 paisa or 1.32 per cent to close at Rs 72.49. Dow Jones gained 582.52 points or 2.36 per cent to close at 25,270.83 points. Crude oil too softened and all in all it was a great week for India where the markets went up, rupee appreciated, and crude oil price softened.

Sanctions against Iran kick in from this week, but some exemptions have been given to eight countries including India. It appears that India would pay for Iranian crude oil in rupee terms through UCO Bank which does not have any international branches and therefore has no risk of sanctions.

Muhurat Trading
The NBFC crisis would get resolved to a great extent, once November 14 passes with a very large number of Commercial Papers (CPs) due for payment or rollover. Once all the NBFCs have paid or successfully rolled over, the current crisis in the stock markets would be averted and things would start moving to business as usual.

The SFB crisis of last week has been partially resolved with Equitas holdings announcing that they would dilute by creating a separate company. This, in which the SFB or small finance bank is housed, and then moved to creating a merger of the two entities. The other company Ujjivan Finance is yet to announce their course of action, but it must be on similar lines.

The week ahead sees Diwali and there would be 'muhurat trading' for an hour on Wednesday, November 7, between 5.30 and 6.30 pm. Thursday would be a holiday and therefore one is likely to see profit taking on Tuesday in the second half of trading. Friday will depend on what happens in the US with China trade wars and the elections due on Tuesday, November 6, where the Democrats are expected to fare better and cause problems for the Republicans.

Remain positive
The government completed over Thursday and Friday the OFS for Coal India and sold 19.80 crore shares with a floor price of Rs 266 to raise over Rs 5,267 crore. The issue was oversubscribed and had a discount of 5 per cent for retail investors. The share price of Coal India was under pressure and lost 19.45 or 6.93 per cent to close at Rs 261.35.

It appears that the low that the markets made on Friday, October 26 is a short-term bottom and it should hold in the near term. There is a possibility that the same can be tested next week when commercial paper is paid or rolled over on 14th November. If nothing adverse happens on this day, then the next possible date could be December 11, when election results of the five states conducting assembly polls are announced.

Markets are back with a bang and should continue to remain positive in the short three days and one hour of trading in the week ahead. Use dips to buy and strong rallies to book profits. Volatility and swings to continue. Wishing all readers a Happy Diwali and prosperous Samvat 2075.

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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