Santa Claus Rally to Last till Year End?

Markets were super volatile last week on election day and there were major hiccups as well. Panic hit D-Street when for a brief moment it appeared that the Congress was leading the election trends and the markets slumped sharply. The BSESENSEX made a low of 32,595 points on Monday and a high of 33,801 points, an intra-day swing of 1,206 points before closing at 33,601 points, a net gain of 139 points. NIFTY similarly had a swing of 369 points and closed at 10,388 points, a gain of 55 points.

The BJP retained Gujarat in a tense and closely followed election winning 99 seats out of 182 seats. In Himachal Pradesh they upstaged the ruling Congress winning 42 of the 68 seats in the state. In what could be termed a quirk of fate while the party won their face for Chief Minister lost. These election results have been a win-win situation in more ways than one.

Many believe that the BJP was getting over confident and losing touch with ground reality. They needed a shock treatment and to be brought down to earth. By being given a fight in Gujarat it has been achieved and the party sent a message. Secondly the Congress is yet to get its act together and this result shows the Congress that people are willing to look at them provided they get the same together. Thirdly all the noise about demonetisation and GST has been proved to be incorrect with results from Surat and all other urban cities of Gujarat where the BJP has performed very well. It shows that people are for reforms and are willing to go with them. The one place where the party had a setback was in Saurashtra where the cotton price issue and Patidar movement hit the ruling party. In short this would put BJP on alert and help in the coming elections in Karnataka. A point to note that after the results of Bihar where the maha-gatbandhan hit the party, they more than made up in the next election held in UP. Will we see a chastened and rejuvenated BJP in Karnataka post setback in Gujarat?

Coming to the markets, the BSESENSEX made new highs and gained 477.33 points 1.41% to close at 33,940.30 points. NIFTY gained 159.75 points or 1.52% to close at 10,493 points. Dow Jones continued to gain ad post new highs. During the week it gained 102.37 points or 0.41% to close at 24,754.06 points.

In primary market news, the issue from Astron Paper Limited was oversubscribed a massive 243.29 times. QIB portion was subscribed 103.36 times, HNI 396.99 times and Retail 77.93 times. Surplus liquidity continues to be the driving force behind the markets.

The short trading week would see December futures expire on Thursday and the calendar year end of Friday the 29th December. The current value of NIFTY at 10,493 gives bulls a lead of 266.45 points or 2.54%. It is a good lead and markets looking positive in the immediate short term give bulls an upper hand. In all probability markets should end on a positive note for December futures expiry. One last thing is that there would be some activity in some of the institutional held midcap and thinly traded shares to ensure that the NAV closes on a strong note. Any such sharp move should be used to book profits as NAV happens only at best four times a year. There would be better opportunities available to buy the shares again.

Markets made new highs on expected lines post the election results be8ng declared. Having done so, there is every possibility that they may continue to gain some ground in the coming week. Allow the correction to begin which could happen on the last day of the week and not pre-empt the same. Enjoy the cool Mumbai weather and market up move as long as it lasts.

You can leave a response, or trackback from your own site.

Leave a Reply

Subscribe to RSS Feed Follow me on Twitter!