It was an eventful week in the markets where the much awaited GST bill was passed in Rajya Sabha without much drama. The constitution amendment bill was passed unanimously on Wednesday and markets were lacklustre on Thursday surprisingly. Markets saw a strong upsurge on Friday and it was more to do with liquidity rather than GST itself.
What next after this bill has been passed? It goes back to Lok Sabha because some changes were made and thereafter the states need to pass the bill in their assemblies as this is a change to the constitution. While the effective date is 1st April 2017, a lot of work at rapid pace needs to be done to get there. Not impossible but it needs careful planning and implementation.
The BSESENSEX notched up sharp gains on Friday and therefore managed weekly gains of 58.51 points or 0.21% to close at 28,110.37 points. NIFTY closed with gains of 44.65 points or 0.52% at 8,683.15 points. The week ahead has RBI meeting on Tuesday for its policy review meet which incidentally would be the last held under governor Raghuram Rajan whose term expires next month. Also the monsoon session would end on Friday.
There were two issues open for subscription last week. The first issue was from Dilip Buildcon which was subscribed 20.95 times. The QIB portion was subscribed 9.75 times, HNI 79.64 times and retail portion 2.35 times. The second issue was from S. P. Apparels which was subscribed 2.66 times with QIB portion subscribed 2.21 times, HNI 5.10 times and retail 1.90 times. In the coming week there are no issues opening as of now.
Shares of Advanced Enzyme Technologies listed on Monday. The listing was with gains of 31.5% on day one where the share closed at Rs 1,178 against an issue price of Rs 896. The tragedy was that HNI’s who had subscribed the issue 394 times lost money as the cost of funding was Rs 350 and the share gained Rs 282. The share from the next day gained further and closed the week with gains of Rs 422 or 47% at Rs 1,418. All those HNI investors who held on for a couple of days would have made money eventually.
This makes one believe that interest rates are softening and the demand being generated therefore is rising significantly. This automatically ensures subscription and listing pop. How long this would continue is anybody’s guess.
RBI Governor Raghuram Rajan would be reviewing the last monetary review before his term expires in September on Tuesday the 9th of august. It is widely believed that the rates would be kept unchanged. The government had earlier this week announced that consumer inflation would be target at 4% over the next five years.
By and large a quiet week ahead with not too much of news flow. Post the passing of GST bill and an unchanged monetary policy being expected, markets would consolidate. Valuations are expensive, hence would advise taking money of the table. The only thing that could go wrong with my thought is liquidity.
