A quiet week came to an end at the bourses with the benchmark indices gaining 0.71% and 0.79%. The broader market too gained in the same range. After Skymet it was the turn of the MET department to up the monsoon forecast with a zero chance of there being a shortfall this time around. With such a strong forecast the impact of rising oil prices will be more than offset by the gains from monsoon and the benefits of a rebound in the economy.
The markets are now just waiting for the rains to hit the Kerala coast and it to be officially declared as the monsoon having set in. Raghuram Rajan and RBI meet on Tuesday for the bi-monthly policy review and it is believed that there would be no change in policy rates. The only important thing that could emerge is that the stance to a rate cut provided monsoon is bountiful thus leading to a fall in food inflation could act as a trigger.
Recently listed Ujjivan Financial Services which is into micro finance business and has been granted a SFB licence was the star performer gaining Rs 90 or 42.79% during the week. Since listing under a month ago the share price has almost doubled moving from Rs 210 the issue price to Rs 382.95 at close on Friday. During the course of trading on Friday, the share had hit the upper circuit of Rs 399.50. Clearly the stock has outperformed the other recent listed entity in the same space Equitas Holdings which has moved from Rs 110 the issue price to Rs 173.60, a gain of about 57%.
The monsoon session of Parliament is still some time away and would begin in the latter half of July. However things are getting hot and new battle lines being drawn up. Results of the biennial Rajya Sabha elections due on 11th June would help the NDA marginally and reduce the gap between them and the opposition. Further the TN Chief Minister is to visit New Delhi this week and meet the Prime Minister. A possibility of her joining the NDA or supporting them from outside is on the cards and this would pave the way for the NDA to overcome the shortage of strength in the upper house. The possibility of legislative business currently stalled for want of numerical strength would therefore be taken care of.
Markets are looking tired having overcome the strong resistance recently and posting calendar year highs. They need to consolidate and regain strength to move forward. A trigger to make a short term top could be the outbreak of monsoon.
In global news the Fed meets in the following week and is unlikely to raise rates considering the fact that Great Britain votes on a decision to stay with the EU or not on 23rd June. Considering various factors it appears the Fed is buying time and unwilling to change rates on some or the other pretext. Very clearly growth is at a premium in almost all geographies and therefore India has a chance to outperform one and all.
Trade cautiously and it would be advisable to take some money off the table at the current time.
