It was a week full of action at the markets and elsewhere as well. Markets opened the week with a bang and were up for the first three days, with profit taking over the remaining days. BSESENSEX gained 314.74 points or 0.88% to close at 36,009.84 points. NIFTY gained 67.60 points or 0.63% to close at 10,794.95 points. The broader indices saw the BSE100, BSE200 and BSE500 gain 0.58%, 0.63% and 0.47% respectively. BSEMIDCAP gained 0.19% and BSESMALLCAP gained 0.05%.

The Indian Rupee lost 77 paisa or 1.10% to close at Rs 70.49. Dow Jones gained 562.79 points or 2.40% to close at 23,995.95 points.

The US government continues to remain shut over the budget issues with the Democrats unwilling to toe the line of Donald Trump. Trumps insistence that he be allowed to spend money to build the wall with Mexico is the major bone of contention. One wonders whether Trump is right in what he says when the longest surviving wall was brought down with the unification of West and East Germany way back in 1989. The wall between East and West berlin was 96 kms long but just 27kms of that separated East and West Berlin. In the 21st century having another wall being made between US and Mexico, sounds preposterous and the cost is estimated to be 30 billion dollars. Incidentally this wall would be of 1,933 miles, the length of the border of the two countries. God knows what the outcome of the present stalemate would be with no side willing to give way.

Bandhan Bank announced the merger of Gruh Finance with itself to meet the dilution norms required as per RBI directive. The ratio of the merger is 568 shares of Gruh Finance for 1000 shares of Bandhan Bank. Shares of both companies have fallen since the announcement which happened on Monday the 7th of January. Bandhan Bank shares were trading at Rs 528.65 on Friday the 4th of January and at Rs 501.10 on Monday before the announcement came post market closing. The share price fell further to Rs 450 during the week before closing at Rs 454.15, a loss of Rs 74.50 or 14.09%. Shares of Gruh Finance fell more from Rs 318.50 to Rs 241.65. The low was Rs 228.40. The loss was Rs 76.85 or 24.13%.

Investors wanting to be shareholders of the merged entity have an arbitrage opportunity where they can buy shares of Gruh Finance and get Bandhan Bank post-merger at a price of Rs 425 against the market price of Rs 454.15, because of the ratio currently. This happens if one were to buy 5.68 shares of Gruh Finance he would get 10 shares of Bandhan Bank post-merger. If this difference is not minimised, shares of Bandhan Bank would be under pressure.

The cabinet proposed and introduced the reservation bill in both houses of Parliament and the same was passed in record time. The bill allows a reservation of 10% quota for the poorer section irrespective of caste or religion in educational institutions and government jobs. This would help the upper caste and should translate into votes for the ruling BJP from the upper caste voters who felt nothing was done for them. With the passing of this bill in record time, the stage has been set for the general elections of April-May 2019. This was a bill which no political party could oppose even though the opposition which had an upper hand was trying to stall it.

Results were declared by the two IT giants, TCS and Infosys on Thursday and Friday respectively. There are positive signs from these results and augur well for the IT sector. Infosys has had issues with the recent acquisitions and these have put the company on a back foot, but the other businesses have done well, and the company upped its guidance. Further Infosys has announced a buyback of shares at Rs 800 totalling Rs 8,260 crs. The price of Rs 800 is at a premium to the closing price of Rs 684 by Rs 116 or 16.95%. This is part of the plan to return money to shareholders.

More people continue to remain bearish on markets and believe that every rally is an opportunity to short the market. While their belief cannot be challenged the fact remains that markets are in a state of flux not only in India but globally. US has its problems with Trump, the wall with Mexico and trade war with China, while UK and Europe are struggling with BREXIT. There are concerns about the elections in India, but they are still four months away and there are too many moving parts to the same. Markets would continue to move up if bearish sentiment remains. The pace of rise could vary from time to time. Use rallies to exit long positions and falls to add to positions.

The first week of the new calendar year had all the action one could expect. The week began on a flattish note and bid adieu to 2018. The first day of 2019 began on a negative note and midway did a very sharp U-turn to turn things around and end on a positive note. The next two days were negative and finally Friday, the last day of the week was positive, but not enough to end the week in the black.

BSESENSEX lost 381.62 points or 1.06% to end at 35,695.10 points. NIFTY lost 132.55 points or 1.22% to close at 10,727.35 points. The broader indices saw BSE100, BSE200 and BSE500 lose 1.23%, 1.20% and 1.11% respectively.

Dow Jones which has been having a torrid time saw a huge bounce back on Friday and gained over 700 points on that day. Dow closed the week with gains of 370.76 points or 1.61% to close at 23,433.16 points. The Indian Rupee gained 22 paisa or 0.31% to close at Rs 69.72.

Calendar year 2018 saw BSESENSEX gain 2,011.50 points or 5.91% to close at 36,068.33 points. NIFTY gained 331.85 points or 3.15% to close at 10,862.55 points. BSEMIDCAP was down 13.38% while BSESMALLCAP was down 23.53%. Dow Jones lost 1,580.40 points or 6.39% to close at 23,138.82 points. The calendar year 2018 was a tough one for equity markets and because the benchmark indices, BSESENSEX and NIFTY ended with gains, it is commendable.

Vijay Mallya has been declared an economic offender and the next course of action would be the permission to seize and sell his properties to recover dues. The diamantaire Nirav Modi and his uncle have started singing, stating that they are willing to settle but will not return to India as they fear for their lives. This was a similar tune sung by Vijay Mallya as well. God knows how long they will evade the long arm of the law before things catch up with them as well.

Supreme Court is to reopen the class action suit against Neste India in its case of Maggi Noodles. The company has been accused of having excessive lead and flavour enhancer MSG in its products. The case had surfaced in January 2015. The peak of the share price in January 2015 was Rs 7,425 which fell to Rs 4,990 by February 2016. The share peak in December 2018 was Rs 11,700 which has fallen to Rs 10,878 as of Friday the 4th of January. How long this case would last or come to a logical end is anybody’s guess, but there would be price damage for sure. Depending on the outcome, this share is likely to be in focus till the case gets over. Mumbaikars would recall the harrowing time that they faced when stocks of Maggi were destroyed, and people went without getting Maggi for some time. Whether a similar situation would arise this time or not would depend on what course of action the Supreme Court takes.

One thing is for sure this company would be in action and focus during the supreme court discussion. The price damage and time taken is difficult to assess at this point of time. However at a fall of 25% from the peak level one can take a calculated risk in investing in this company. This investment could be in the form of S I P.

Result season for the October to December quarter 2018 kicks off with two large IT companies declaring their results this week. TCS declares on Thursday the 10th of January while Infosys declares on Friday the 11th of January. IT sector is likely to see muted results this quarter and their share prices were under pressure this week. Similarly another sector under -pressure has been auto as the growth in sales seem to be facing head wind.

The quarter for which results are to be declared saw the NBFC sector experience a liquidity crisis. It would be interesting to see how this sector fares when results are declared. There is expectation in general that results for the quarter will show some positive signs which could help prices stabilise going forward.

Dow had a stellar performance of gaining over 700 points on Friday. This is good enough for us to have a strong opening on Monday. The mood on the street is bearish, and almost 7 out of 10 people will tell you to short the market. If this view remains, markets will gain, and the rally will be on account of short covering. Markets will peak only when the last bear is dead.

Enjoy the rally but be nimble footed.