Like a flat tyre

We are limping towards a lacklustre end to the year

Congress party members gather outside the Presidential Palace after meeting President Pranab Mukherjee in New Delhi. Pics/AFP

Markets are looking tired and seem to have lost their momentum completely. They were down on four of the five trading days last week. Net result was that BSESENSEX lost 257.62 points or 0.96 per cent to close at 26,489.56 points. NIFTY lost 122.30 points or 1.48 per cent to close at 8,261.75 points. The broader indices like the BSE100, BSE200 and BSE500 lost 1.69 per cent, 1.75 per cent and 1.74 per cent respectively. BSEMIDCAP lost 2.38 per cent and BSESMALLCAP lost 1.69 per cent.

In sectoral gainers, there were just two with BSEIT up 2.23 per cent and BSETECK 1.03 per cent. In losers, the top loser was BSEMETAL down 4.435 followed by BSEFMCG 2.88 per cent and BSEPSU 2.82 per cent. In individual stocks the top gainer was TCS up 4.03 per cent followed by Reliance Industries 3.03 per cent, HCL Tech 2.5 per cent and Tata Motors 2.40 per cent. On the losing side, were Bharti Tele down 6.36 per cent followed by Hindalco 6.25 per cent and Coal India 6.18 per cent. Punjab National bank was down 7.43 per cent while Power Finance lost 7.48 per cent.

The US Fed raised interest rates by 25 basis points and ended the suspense of almost two quarters about the impending rate hike. Dow Jones gained 86.56 points or 0.44 per cent to close at 19,843.41 points. The Dow Jones has been hitting new all-time highs on an almost daily basis. The Indian Rupee lost 34 paisa or 0.50 per cent to close at R 67.76.

Nobody’s working
The winter session of Parliament ended with hardly any constructive work being concluded. The session was hit by disruptions, protests and adjournments. The President of India, Pranab Mukerjhee, had also commented on the spate of adjournments in Parliament and stressed on the responsibility of elected members to meet and discuss issues. It appears his request fell on deaf years.

The economy has certainly taken a beating because of the effect of demonetisation and the lack of adequate cash/liquidity with people. While corporate India is limping back to normalcy the consumption part or retail story is still affected and would impact the quarterly results for the period October to December 2016. While this impact could be significant, brokerages have so far chosen to refrain from downgrading earnings of companies for third quarter and full year ending March 2017. It is a matter of time before it is done and could start happening in the first week of January 2017.

Now, GST
The Fed has raised interest rates, Reserve Bank of India (RBI) kept them unchanged and Parliament session has ended. The fourth event is introduction of GST which may still happen between April-September. Currently, the events are done with and there is nothing in terms of news flow for the market. With nothing to look forward to, the present state of market would make things more difficult.

Markets are likely to stagnate and continue losing momentum. With end of year holidays around the corner things at the market are likely to become even more lacklustre. In such conditions markets tend to lose ground even though the same may be gradual.

It therefore makes sense to stay on the sidelines and wait for opportunities to buy on falls or sell when markets rally strongly.

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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