It’s been a great week at Dalal Street and looks like Diwali has just got extended. Fireworks are just not in India but US and Japan seem to be celebrating as well. There is a famous saying in Hindi “Teji ka hai bolbala, mandi ka hai muh kaala” Translated it simply means everyone likes when markets are rising and nobody likes when markets are bearish. So am I. Markets are at new highs and the BSESENSEX registered a four digit weekly gain, probably for the first time. In US the Dow recorded gains of 585 points or 3.48%. In percentage terms gains in India were 4.03% in the SENSEX and 4.08% in the NIFTY. Nikkei rose a whopping 4.83% on Friday after the Bank of Japan announced that pension funds can buy upto 25% of foreign equity against 12% earlier. The weekly gains of Nikkei were 1,122 points or 7.33% to close at 16,413.76 points.
Markets booming is not all the story. Oil is down to 80$ and gold is about to make new lows currently at $1,173. In India where we have a 10% customs duty on gold likely to be revised downwards to curtail and combat gold smuggling, price of gold has fallen to below 26,000. Silver has fallen to 35,000 and there is every possibility that sooner or later customs duty on gold would be reduced from the current 10% to curb rampant smuggling of gold. All of these measures will ensure that the subsidy bill on account of petro products will reduce. Call it timing call it luck, diesel prices have been reduced for a second time in about 15 days and the reduction is more than Rs 2 per litre.
The Modi government has announced austerity measures and cut non-plan expenditure by 10%. First class travel of babu’s and holding of meetings in five star hotels has been banned. With this the fiscal deficit would be kept under check atleast partially and sent he right message all around. Secondly with the petro product price cut there would be a fall in consumer inflation and clamour for interest rates cut would begin. The Finance Minister has started requesting the same from RBI Governor.
SAT, the tribunal seems set to give some short term relief to DLF by allowing it to redeem units of mutual funds held by and debarred by SEBI. The bigger issue of its debarment for non-disclosures would be heard subsequently. The share price recovered 3.53% to close at Rs 124.50. The government in Haryana has changed and is now headed by the BJP who also rules the centre. The animosity between the top leaders of the two national parties seems to be growing with which each election. It is therefore no surprise that investigation of land deals of the son-in-law and DLF was to be a top priority item post elections. While any such investigation is always bad news for the company under question in the short term at the same time it’s disadvantageous to its shareholders as well. Traders love volatility but it hurts investors. It therefore makes sense for investors to stay away from the share in the short and medium term and simply look at it as a nightmare from which one will get up some time later.
Markets are on a roll and there’s no denying the same. Good times don’t end abruptly but there is also a time to take money of the table and re-enter later. With trading holidays on Tuesday and Thursday it makes imminent sense when momentum will get broken to take advantage of the positive start today to book some profits.
Have a great week ahead.
