The year 2013 is about to come to an end with a mere two trading sessions left. The CM in Delhi is part of a new evolving political scenario which would be closely watched by political parties and citizens. The unheard is happening and a new political class would breed post these developments. This is a wakeup call for the politicians and it appears that many familiar faces may not be around once the 2014 elections are over.
The immediate fallout of Delhi is in Maharashtra where the state appointed committee to probe the Adarsh scam was categorically rejected by the cabinet. The Congress Vice President has asked for a relook at the probe report and unless even this is a sham many heads will have to roll if this report is taken to its logical end. The relationship of Delhi and Mumbai is apparent as one is the political capital of the country while the other is the financial capital. Elections to the state of Maharashtra are also due along with the general elections and the campaigning pitch would be at very high levels
The marketsdid well last week but the fireworks expected were missing. The yearend holidays and subsequent low volumes could be a possible reason for the same. The much maligned and hated periodic call auction would come to an end as we understand the same. A much watered down version would be brought into force in the course of the next few weeks and a reflection of the same was a smart performance by the midcap and particularly the smallcap stocks which outperformed any other sectoral indices. Yearend NAV propping could also be a reason but the performance was across the board.
Trading in the new calendar year would begin in India on the 1st of January while the rest of the world would join in on the 2nd. This makes it a punter’s day and one could see sharp movements in selected stocks on lower than average volumes and one should be able to avoid taking fresh long positions in such stocks.
FMC has after earlier declaring Jignesh Shah and his nominees as “Not fit and proper” persons has now asked them to reduce their stake in MCX from 25% to 2%. The matter would be challenged in a court of law but clearly things seem to be against the FT management. In yet another related development a group of investors have filed a suit against the brokers and held them responsible for the losses of investors in NSEL. The allegation is that due care and diligence was not taken and receipt against the money paid was not obtained. Very clearly NSEL resembles a case of things being too good to be true and one is surprised that the issue was highlighted at the end of July and even 5 months later allegation are being traded. One is still unable to reproduce the money trail and explain where did Rs 5600 crs go? Speaks volumes for the efficiency of the system.
Results season would be round the corner and in less than two weeks leading companies would have begun to declare results. The cues one would expect or like to get from them are enough signs that the economy has bottomed out and probably the worst is behind us. The economy is going through tough times and the current political situation is not helping in any manner. The new found enthusiasm in the ruling government needs to be reflected in action rather than just comments.
The week ahead would be characterised by a significant drop in volumes because of the holiday times. The change in periodic call auction rules and the holiday could see sharp movements in the midcap and smallcap space on the positive side. With December futures expiry being quite smooth there is every possibility of their being some upside move in the week ahead. Like mentioned earlier volumes will be a key and one needs to be cautious while trading in this particular week.
In conclusion a range bound market with limited but lower volumes. Though there is a positive bias in the beginning part of the week, they could be reversed in the latter half of the week to finally close flattish at the end of the week.
