Tired and wired

The markets have run out of steam

The markets ended the short four day trading week with minor losses. The BSE SENSEX lost 75.40 points or 0.27 per cent to close at 28,077 points, while the NIFTY lost 5.25 points or 0.06 per cent to close at 8,666.90 points. The broader indices saw the BSE100, BSE200 and BSE500 gain 0.36 per cent, 0.38 per cent and 0.71 per cent. BSEMIDCAP gained 2.21 per cent while BSESMALLCAP was up 2.01 per cent. In sectoral gainers, the top performer was BSEMETAL up 4.01 per cent followed by BSEBANKEX 2.48 per cent, BSEPOWER 2.21 per cent and BSEOIL&GAS 2.11 per cent. On the losing side the top sector was BSEIT down 3.72 per cent followed by BSETECH 3.16 per cent and BSEFMCG 0.47 per cent.

Deputy Governor of RBI Urjit Patel will take over as the central bank’s new head, ending two months’ speculation about Raghuram Rajan’s successor.  Pic/PTI  

Suspense
In individual stocks, the top gainer was SAIL up 8.41 per cent followed by Hindalco 8.38 per cent, Bank of Baroda 8.24 per cent and Cairn India 8.10 per cent. On the losing side, were Wipro down 4.26 per cent followed by Infosys 3.95 per cent and HCL Tech and Tech Mahindra at an identical 3.94 per cent. Clearly, the gainers were bigger than the losers. The Indian Rupee lost 17 paisa or 0.25 per cent to close at 67.06. Dow Jones lost 23.90 points or 0.13 per cent to close at 18,552.57 points. One gets a feeling that markets have run out of steam and are trying to catch up on their breath before the next move. The uncertainty is whether this next move would be upwards or downwards.

Opening
In primary market news, the issue from RBL Bank has opened and the issue has received 0.66 times subscription on Day One. The price band is Rs 224-225 and the bank has allotted shares to 25 anchor investors comprising 52 entities. Shares are being offered at a P E multiple of 23.75-23.86 times the annual earnings based on financial year, ended March 2016. On the book value, the shares are offered at 2.44 times. The PSU pack trades below book value, while the leading private sector banks trade upwards of three times book value going upto 4.20 times for Kotak Mahindra Bank. Looking at the fact that the bank has completed the investment, it looks attractive to invest at current values.

Successor
The Govt has appointed present Deputy Governor of the Reserve Bank of India, (RBI) Urjit Patel to succeed outgoing governor Raghuram Rajan. The rationale behind the same was to provide continuity in direction and policy as Urjit Patel was a key player in Raghuram’s team over the last three years. One clear thought emerging is that the new governor is not going to reduce interest rates in a hurry. On the economic data front, while the IIP or industrial production numbers for June 2016 have improved compared to the previous month and year ago numbers, inflation whether it be CPI or consumer and WPI or wholesale have increased for July. While this is a short term aberration and is likely to again reduce in the coming months, it would add pressure on the Govt and the new RBI governor as far as interest rates are concerned.

Series
August series futures expires on Thursday, August 25. The current value of the series is 8,666.90 points and at this level, they are virtually flat, being up less than a point, at 0.60 points. The series is therefore wide open for both bulls and bears and the bears in particular, would look to drive home and create an advantage, something they have not been able to do in quite a few months now. With virtually no news in the offing, they could upstage the bulls. The markets are looking tired and need to consolidate before any next big move. A larger correction is in the offing and it could start this week. Let's keep our fingers crossed for the markets and hope for the best.

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.

"Exciting news! Mid-day is now on WhatsApp Channels Subscribe today by clicking the link and stay updated with the latest news!" Click here!