Seesaw start to March

Narendra Modi and Arun Jaitley

The week gone by was full of extreme volatility. The markets made its intra week low just as the budget speech ended and rose a massive 2000 points from there. The net gains were 1,492.18 points or 6.44 per cent on the Sensex which ended at 24,646.48 points.

Prime Minister Narendra Modi intervened as Finance Minister Arun Jaitley decided to defer the plan to levy tax on 60 per cent of employees' provident fund withdrawal, the final decision will be announced in Parliament, tomorrow. Pics/PTI

Nifty gained 455.60 points or 6.48 per cent to close at 7,485.35 points. Broad markets gained similar with BSE100, BSE200 and BSE500 up 6.68 per cent, 6.58 per cent and 6.62 per cent respectively. The top sectoral gainer was BSEBANKEX up 11.75 per cent followed by BSEREALTY 11.34 per cent, BSEMETAL 10.22 per cent and BSEPSU 6.34 per cent. There was no sectoral loser but BSECONDUR gained the least at 3.63 per cent.

Ups and downs
In individual stocks, the top gainer was State Bank of India up a massive 20.58 per cent followed by ICICI Bank 19.29 per cent and Vedanta 21.52 per cent. Tata Steel gained 16.08 per cent while in other stocks DLF gained 23.67 per cent. On the losing side, there were hardly any stocks and they were led by Sun Pharma down 1.61 per cent followed by Mahindra & Mahindra 1.14 per cent.

FII's who were net sellers in the market for the last few months turned buyers on the day after the budget, and continued to remain buyers for the remainder of the week. The budget has been well received by the markets and the fact that we gained on all four days post the budget confirms the same.

The Indian Rupee staged a remarkable recovery and gained Rs 1.54 or 2.24 per cent to end the week at Rs 67.08 to the US Dollar. Global markets gained and the Dow Jones was up 366.80 points or 2.20 per cent to close at 17,006.77 points. Emerging markets too gained and the Brazilian stock index BOVESPA gained over 13 per cent for the last week with the currency appreciating over 6 per cent for a combined weekly gain of 20 per cent.

In India, it was the budget which helped, can't say for sure what it was for the rest of the world. Sentiment and some recovery in oil prices did help. Assam, Kerala, Puducherry, Tamil Nadu and West Bengal elections have been announced and will be held from April 4 to May 16. The results for the same would be declared on May 19.

BJP or the NDA does not rule either of these states currently and at best they are fringe players. In case they can make a dent in these elections it would be at the cost of the ruling parties. The vexatious tax on withdrawal of EPF is to be rolled back next week after the Prime Minister said that this would cause problems to the salaried class. It's a welcome move and would save the salaried class from great hardships when they would have retired and needed financial security the most.

Eye on Ranjan
Markets are now looking forward to RBI chief Raghuram Rajan to chip in with his contribution of a rate cut when RBI meets in April for the monetary policy review. Considering the fact that the government has addressed the issues of inflation and also maintained fiscal discipline, there is no need to debate whether a rate cut would happen or not. It seems quite certain in the current situation.

Markets have risen sharply and are at critical levels currently. If the rally has to continue for more time we need to consolidate before moving forward. A correction at these levels would be healthy and welcome for the markets while continuing to gain without a correction could stretch things and make it riskier.

The week begins with a holiday today and there would be just four trading sessions. The possibility of global markets correcting seems a greater possibility. If there is a correction tomorrow, look to enter the market but if there is no correction stay away from any purchases. There will always be a tomorrow and also at better prices.

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.