The inevitable correction came and in just four trading days the midcap and smallcap space look battered and bruised. The BSESENSEX lost 2.39% and NIFTY was down 2.36%. BSEMIDCAP lost significantly more at 4.24% and BSESMALLCAP was down 4.29%. As mentioned the price erosion was much more in the midcap and smallcap space.
Global markets too were weak and the trigger was the plausible outcome of US elections. While there can be only one winner in this election, the real loser would be America. The people of United States of America are unfortunately divided on who should be the next President and post the election a lot of time would be needed to heal the friction generated during the election. Anyway we would in all probability know the next president in about 48-72 hours from now.
There was a lot of news flow last week. The GST Council has announced rates for GST. There would be four rates at 5%, 12%, 18% and 28%. Half the items in the basket of consumer index would be at 0% so that inflation could be kept under check. The 28% rate would also have a cess for luxury goods and sin goods. The rate for gold has not been announced and would be done later in the month.
The Cyrus Mistry-Ratan Tata saga is likely to be a prolonged matter with the Indian Hotels directors approving the chairmanship of Cyrus Mistry. Three of Tata group companies would be meeting for quarterly results this week. The spat is becoming uglier and is sending wrong signals to investors.
Two non-bailable warrants have been issued against Vijay Mallya. One cannot be sure whether he has any intentions of retuning to India to settle matters or not.
The government sold shares of Larsen & Toubro through negotiated deals on Friday. These shares were held by SUUTI. The shares were sold at the floor price of Rs 1,415.66.
Reliance Industries along with its partners has been fined $ 1.55 billion in the ONGC gas case. Without doubt RIL would have to appeal against the same. For the time being the share price could be under pressure as the company is facing issues on many fronts whether it be gas or telecom.
Shares of PNB Housing and Varun Beverages would list on Monday and Tuesday respectively. While the former commands a premium, the latter struggled to get subscribed and had lack of support other than QIB’s. The listing of Varun would determine who was right (QIB’s) and who wrong (HNI & Retail).
Markets have fallen for five straight sessions since ‘Muhurat’ trading began for Samvat 2073. A technical bounce is in the offing. It will be just a technical bounce not the end of the correction. Use the same for reducing exposure and not adding fresh long positions. Trade cautiously in a week where volatility would increase with the presidential elections.
