Volatile style

The markets seemed to be in a corrective mood last week, and, lost significant ground. The advantage that bulls had in the October futures series was partially surrendered in the four days of trading into the expiry of the series on Thursday.

Finance Minister Arun Jaitley addresses a conference in the city over the weekend. Pic/PTI

There were further losses on Friday and the markets ended the week with the BSE SENSEX losing 813.98 points, or 2.96 per cent to close at 26,656.83 points.

The NIFTY lost 229.65 points or 2.77 per cent to close at 8,065.80 points. The broader markets saw the BSE100, BSE200 and BSE500 losing 2.59 per cent, 2.42 per cent and 2.35 per cent respectively. The BSEMIDCAP lost 1.72 per cent and BSESMALLCAP was down 2.14 per cent.

Stocks
Amongst the sectoral indices there was just one gainer in BSECONDUR up 0.29 per cent. The only other one which was marginally down was BSEIT at 0.18 per cent. All other sectors were at the receiving end.

The losers were led by BSECAPGOODS down 5.89 per cent followed by BSEREALTY 3.65 per cent and BSEPSU 3.30 per cent. In individual stocks, the gainers were led by Dr Reddy's up 2.03 per cent followed by HCL Tech at 1.87 per cent. In other gainers, Gujarat Gas was up 5.53 per cent while Kotak Bank gained 3.77 per cent.

The losers were led by Axis Bank down 9.65 per cent followed by Bank of Baroda 7.53 per cent. Heavyweight stocks ITC lost 6.59 per cent, Larsen & Toubro lost 6.56 per cent and HDFC lost 6.26 per cent. In other stocks, DLF was down 10.20 per cent.

Clearly, the losers were far more than gainers and so also the extent of fall was more significant than the gains. The October futures series expired at a level of 8,111.75 points, a gain of 243.25 points or 3.09 per cent.

While the gains were tapered with losses during the last week, the November series has opened distinctly weak and on the first very day, the NIFTY has suffered losses of 47 points. This is not a good opening for NIFTY and would put pressure on the same going forward. The heavyweight stocks have suffered on account of poor results.

ITC reported flat numbers while L&T net profit was higher only on account of other income resulting from stake sale in a business. Further, the order intake seems to be suffering. The biggies faltering indicates that the economy and the turnaround expected therein seem to be faltering.

Flat
The Dow Jones was almost flat with the index gaining a mere 16.84 points or 0.09 per cent to close at 17,663.54 points. The Indian Rupee lost 44 paisa or 0.68 per cent to close at Rs 65.26. FIIs turned sellers on Friday, and, made the cumulative number for the week negative at Rs 1,488 crore.

Domestic institutions were the exact opposite and bought stocks worth Rs 1,603 crore. In the FED meeting, it has become largely clear that interest rates would be raised in the meeting in December. The global impact of such an action coupled with what China does, would be key drivers for global markets in the medium term.

Caution
Moody's Analytics, a research firm of global rating agency Moody's, has cautioned the Prime Minister Narendra Modi and the ruling NDA about the growing intolerance and negativity, created by ministers shooting from the lip. The government is in the minority in the upper house.

The lower house where it has a majority has been stonewalled by a party having a strength of less than 10 per cent of the strength of the house. This remark came a day earlier to the RBI governor, R Rajan, speaking at the IIT Delhi Convocation and emphasised the need, "to improve the environment for ideas through tolerance and mutual respect".

While the heightened tension on communal lines may be part of an agenda when elections are on, the need to cool off and diffusing the situation has become imperative. Bihar would have completed the fourth phase of polling yesterday (Sunday), and the final phase would be held on November 4. The votes would be counted on Sunday, November 8 and it would be interesting to see who celebrates Diwali and who misses the same.

Stormy
In the primary market, the IPOs from Interglobe Aviation (Indigo) and S H Kelkar, the fragrance and flavour company were oversubscribed. The former received overwhelming support from institutional bidders.

What was however disturbing, was the fact that employees of the airline company who were given a 10 per cent discount as well, chose to stay away from the offer and subscribed a mere 13 per cent of the offer.

Wonder whether as employees they know more than the investors do? In the final bit of news from the primary market, shares of Coffee Day Enterprises, the company which owns CCD or Café Coffee Day would list today. Markets are volatile and currently under some sort of correction or selling mode.

We need big global or domestic news which could cause a turnaround. The Bihar election results could act as a trigger or further accelerate the current weakness. There would be a clear trend shortly but till then, keep guessing.

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

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