RBI governor Raghuram Rajan steps down from his post in September, signing off with a much-looked-forward-to meeting on Tuesday
It was an eventful week gone by. The biggest financial reform after the 1991 liberalisation has just been cleared by the Rajya Sabha. In the end, it was good sense which prevailed in passing the constitution amendment bill of Goods and Services Tax (GST) unanimously. The AIADMK staged an inconsequential walk out. Though the bill has been passed a lot of work needs to be done at the Centre and the State level before GST actually sees the light of day. The markets did not react to the bill being passed the next day, but chose to do so later, when we saw a sharp 364 point or 1.31 per cent rally on Sensex.
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Finance Minister Arun Jaitley with RBI Governor Raghuram Rajan during the pre- policy discussion at North Block in New Delhi. Pic/PTI
The Sensex in a choppy and eventful week closed with modest gains of 58.51 points or 0.21 per cent to close at 28,110.37 points. Nifty gained 44.65 points or 0.52 per cent to close at 8,683.15 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.39 per cent, 0.38 per cent and 0.36 per cent respectively. BSEMIDCAP gained 0.30 per cent but BSESMALLCAP lost 0.03 per cent.
Gains and losses
The top sectoral gainer was BSEMETAL up 3.68 per cent followed by BSEAUTO 2.73 per cent and BSEPSU 1.34 per cent. The losers were led by BSECAPGOOD down 2.09 per cent followed by BSECONDUR 1.44 per cent and BSEFMCG 0.79 per cent. In individual stocks, the top gainer was HCL Tech up 9.16 per cent followed by Hindalco 7.76 per cent, Tata Steel 7.37 per cent and Hero Motocorp 7.11 per cent. The losers were led by ICICI Bank down 6.37 per cent followed by Bhel 5.52 per cent, Lupin 3.79 per cent and Larsen and Toubro 2.89 per cent.
Global markets saw Dow Jones gain 111.29 points or 0.60 per cent to close at 18,543.53 points. In a surprise and unexpected move, the Bank of England announced a rate cut of 25 basis points and also for buyback of 70 billion pounds of bonds. That is 10 billion corporate bonds and 60 billion government bonds. This move would add tremendous liquidity to global markets. The Indian rupee gained 25 paisa or 0.37 per cent to close at Rs 66.77.
The Reserve Bank of India meets tomorrow for the monetary policy. This would be the last review for Raghuram Rajan as Governor before he steps down in September. It is widely believed that rates would remain unchanged in this meeting. The Govt has announced a target of 4 per cent for consumer inflation as part of the monetary policy for the next five years.
Eye on issues
The primary market saw the listing of Advanced Enzyme Technologies Limited. The listing was with gains of 31.5 per cent on day one, where the share closed at Rs 1,178 against an issue price of Rs 896. The tragedy was that HNIs who had subscribed the issue 394 times lost money as the cost of funding was Rs 350 and the share gained Rs 282. The share from the next day gained further and closed the week with gains of Rs 422 or 47 per cent at Rs 1,418. All those HNI investors who held on for a couple of days would have made money eventually.
There were two issues which had opened for subscription during the week. The first issue was from Dilip Buildcon which was subscribed 20.95 times. The QIB portion was subscribed 9.75 times, HNI 79.64 times and retail portion 2.35 times. The second issue was from S P Apparels which was subscribed 2.66 times with QIB portion subscribed 2.21 times, HNI 5.10 times and retail 1.90 times. In this week, there are no issues opening as of now.
End times
This week would see RBI announcing its policy and a host of views and reviews on GST. Results season would come to an end next week and so would the monsoon session of Parliament. Valuations are looking expensive and though there is plenty of optimism what with GST under the belt and a surplus monsoon after two consecutive years of drought.
There is no shortage of optimism and feel good factors. With liquidity from domestic and overseas adding fuel to the fire, valuations are getting stretched. In such a scenario it makes sense to take money off the table and wait for valuations to become more attractive.
With no events to follow over the next couple of months they would in all probability improve. Use rallies to sell and then wait for better opportunities, is the way to go.
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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