The week began on a positive note with the indices making new life time highs and doing so on every day of the week. The BSESENSEX gained 671.83 points or 1.64% to close at 41,681.54 points while NIFTY gained 185.10 points or 1.53% to close at 12,271.80 points. The broader indices saw BSE100, BSE200 and BSE500 gain 1.46%, 1.31% and 1.25% respectively. BSEMIDCAP was up 0.04% while BSESMALLCAP was up 0.44%.
Markets lost on Monday but gained on the remaining four days. The new intraday highs made on every day of the week saw BSESENSEX register intraday levels of 41,185, 41,401, 41614, 41719 and 41,809 respectively. NIFTY saw levels of 12,134, 12,182, 12,237, 12,268 and 12,293 points respectively.
Dow Jones gained 319.71 points or 1.14% to close at 28,455.09 points. The Indian Rupee lost 31 paisa or 0.44% to close at 71.12.
The Delhi High Court has asked Reliance Industries to submit a list of its assets after it failed to honour an international arbitration award of 4.5 billion dollars to the government. This effectively would put a spoke in the proposed divestment of 20% to Saudi Aramco.This would not affect the deal with BP which has proposed to invest 49% in the retail distribution of fuel and hydrocarbons. This is because the above deal is from existing assets while BP deal is a fresh investment. Reliance share price has been on a roll and are at lifetime highs. They gained Rs 17 or 1.07% to close at Rs 1,599 after touching an intraday high of Rs 1,618 during the week.
Bajaj Finance has invoked its pledge on 24 lakh shares or 10% of Karvy Data Management Services Limited for loans it had made to Karvy Stock Broking. Similarly, ICICI Bank has invoked a pledge on 45 lakh shares amounting to 18.75% of the company. Karvy Data Management Services Limited had reported consolidated revenues of Rs 1,274.39 crs and profit after tax of Rs 75.20 crs for the year ended March 2019. The company is an unlisted company.
SEBI is mandating an upfront margin for retail investors with effect from 1st January 2020. In light of what has happened in Karvy and a Kolkata based broker BMA Wealth Creators, in recent times, investors are wary of now giving power of attorney to brokers. What is surprising is the lax action taken by the regulator in the above case. The act committed by Karvy is tantamount to fraud as he has ‘stolen’ shares from the accounts of customers and given them as collateral to lenders. Lenders in turn are at fault for giving so much of money to Karvy when the balance sheet of the stock broking arm did not have the wherewithal to support the loans being asked for. There should have been an alarm ringing in the mind of lenders when they see shares being deposited by a broker. Allowing the perpetrator of fraud to go scot free is indeed shocking and not expected of SEBI. The least that should have been done is to arrest the person concerned who ordered the fraudulent stealing of shares.
I do not understand the intricacies of the depository system. However, the custodian of shares in the demat account can do only two things. Firstly, move shares from the beneficiary account to the pool account for purposes of effecting pay-in obligations and secondly transfer shares to the beneficiary account. The lender is not an account holder not a customer. When such large number of shares are moving, does the depository system not be able to catch the same? Does it have to wait for a physical inspection only? Beats me and I hope knowledgeable people would throw light on the same.
In light of this massive fraud now asking investors to pay upfront margins for sales is like adding insult to injury. One hopes that the SEBI Chairman Mr Ajay Tyagi looks into this issue with a humane touch and understands the emotions and problems of small investors.
The primary issue from Prince Pipes and Fittings Limited was subscribed 2.21 times overall with QIB portion subscribed 3.54 times, HNI portion 1.21 times and Retail 1.89 times. There were 1.61 lac applications.
Primary market activity has begun in right earnest and we have had two successful listings in December and this issue from Prince Pipes. Another half dozen IPO’s may be expected in the next 45 days. One only hopes and prays that the rising indices do not change the greed factor of merchant bankers and promoters in changing their expectation of valuations.
The week ahead has a trading holiday on Wednesday on account of Christmas followed by expiry of December futures on Thursday the 26th of December. NIFTY at current level of 12,271.80 points is higher by 120.65 points or 0.99%. While the previous week was good for bulls, there could be some consolidation in the coming week. Irrespective of some correction I believe the end of expiry would see the bulls having an upper hand.
In conclusion, Reliance could see profit taking on adverse Delhi Court ruling and a correction in the stock would be good considering the run up in the stock prices in recent times. While markets have had a good run-up, a day or two of correction would make them healthier. Use corrections to take fresh positions in the market.
