The markets continued to be on a roll and make new highs. The BSESENSEX gained 245.08 points or 0.79 per cent to close at 31,273.29 points, while NIFTY gained 58.40 points or 0.61 per cent to close at 9,653.50 points
Union Finance Minister Arun Jaitley with MoS Santosh Gangwar at the 15th Goods and Services Tax (GST) meeting in New Delhi. Pic/PTI
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The markets continued to be on a roll and make new highs. The BSESENSEX gained 245.08 points or 0.79 per cent to close at 31,273.29 points, while NIFTY gained 58.40 points or 0.61 per cent to close at 9,653.50 points. The interesting point to be noted is that more than half the gains came on the last trading day of last week. The broader indices saw the BSE100, BSE200 and BSE500 gain 068 per cent, 0.90 per cent and 0.95 per cent respectively. BSEMIDCAP gained 1.94 per cent and BSESMALLCAP gained 1.49 per cent.
Coming out tops
The top sectoral gainer was BSEFMCG up 2.83 per cent followed by BSEKEACARE 2.09 per cent and BSECONDUR 1.60 per cent. The top loser was BSEMETAL down 2.79 per cent, followed by BSEPSU and BSEIT at an identical 1.38 per cent. In individual stocks, the top gainer was Cipla up 7.54 per cent followed by Hero Moto 6.24 per cent and Dr Reddy 5.87 per cent. The top loser was Sun Pharma down 9.45 per cent, followed by BHEL 8.48 per cent. In other stocks DLF lost 9.54 per cent. The Indian Rupee remained unchanged at R 64.44. The Dow Jones gained 126.01 points or 0.60 per cent to close at 21,206.29 points.
Eye on monsoon
Reserve Bank of India (RBI) meets for its policy review on Wednesday, June 7 where it is widely believed that rates would remain unchanged. The general feeling is that RBI would wait for the monsoon which has broken over Kerala. RBI would track its progress till the next meeting in August before taking any call on interest rates. The interesting thing in the last week has been that everything connected with monsoon has seen price movement. Stocks from the FMCG pack have moved up on the expectation that a good monsoon will see increased consumption.
Similarly, some pharma companies which had already declared results, saw a rebound as the consumption of drugs moves up during the rainy season. Further, Hero Motocorp was another big gainer on the back of expected monsoon and favourable impact on rural economy and therefore two wheelers.
Like we thought
Result season for the January-March period is over and by and large, results have been in line with expectations. There have been a few surprises, pleasant or unpleasant. While a clear trend from the results is still not discernible one thing emerges that the worst is more or less behind us.
Arun Kejriwal
Two sectors which still seem to be suffering and may have some more time to go are the Information and Technology (IT) sector and pharmaceutical sector. The saving grace for the pharma sector, may be domestic sales which are quite strong. However, the US sales and the African markets have taken a big beating. On the positive side, we are seeing signs of the PSU banking consolidating. It appears the problem of NPAs is easing off or showing signs of reducing stress. Some quarters ago, it appeared that this was a largely PSU bank issue but with the leading private banks issuing profit warnings and then providing large sums as NPA, the problem seems to be with the entire industry. This sector, particularly the PSU pack, looks attractive and merits investment considering the fact that valuations have been beaten down mercilessly over time.
Going great guns
The biggest driver in the markets currently is liquidity. It seems to be coming in all sizes and just seems unstoppable. The same is from domestic funds and foreign funds. To add to this is the fact that at every dip there are enough buyers just waiting to enter the market. While the market was struggling in the first four days of the week, by Friday any talk of correction was convincingly quashed. With liquidity and waiting buyers, much more needs to happen to bring about a correction.
The primary market seems to have taken a momentary pause. There would be the listing of India Grid invit this week. Besides this there is no issue planned during the week ahead. One issue listed last week in the form of PSP Projects Limited. The issue was priced at Rs 210 and closed trading at weekend with gains of Rs 7.50 or 3.57 per cent at Rs 217.50.
Ride the rally
In conclusion, currently the markets seem to be very strongly poised and though a correction is overdue, it is just not happening. Enjoy the rally till the going is good but continue to reduce positions as corrections in such situations are normally very swift.
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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