It was a week of gains on Dalal Street even though they were significantly less than the previous weeks. The BSESENSEX gained 93.73 points or 0.335 to close at 28,334.25 points while NIFTY gained 52.60 points or 0.60% to close at 8,793.55 points. The biggest sectoral gainer was BSECONDUR up 5.20% while the biggest loser was BSEMETAL down 1.64%. Similarly in individual stocks the biggest gainer was BHEL up 10.37% whilst the biggest loser was SAIL down 5.49%.

The Indian rupee gained 43 paisa or 0.64% to Rs 66.88. Dow Jones rallied smartly to gain 197.91 points or 0.99% to close at 20,269.37 points. The world is struggling to adjust to Donald Trump’s policies and so is the American administration which has turned down some of his acts like travel ban.

Results for the quarter are better than expected especially in light of the ban on high denomination notes which happened on the 8th of November. This effectively chopped off eight weeks in the quarter and affected liquidity in the system. Despite the impact, results are fairly robust and give a sense of confidence about the economy.

Markets are positive and have maintained the momentum on account of positive inflows from domestic investors on the back of inflows into mutual funds. These flows have balanced the outflows of FII’s. The past fortnight has seen that FII’s have turned buyers as well. Going forward if FII’s and domestic institutions both remain positive and inflows continue we could see sharp gains in the market as well.

RBI and the money market committee decided by a 6-0 verdict to keep rates unchanged. The markets reacted as they know best when the unchanged rates were announced. They recovered thereafter and closed with minor losses. The minutes of the meeting show that going forward rate cuts happening seem over. The positive fallout of this would be inflows into debt from foreigners who were pulling that out as well should happen. With interest rates set to rise in the US, it would have become even more difficult as the differential would have narrowed if rates were cut here. With flows likely in equity and debt the currency would also appreciate and become more stable.

All is not well in Infosys. The founders are unhappy with the board. Whether this is because they no longer have control or what one does not know, but what is happening is certainly not good for the company. Precious bandwidth is being wasted in handling non-core issues and is demoralising to the top management. Readers would recall that in the last few years there have been many such issues where top management has left suddenly. The issue currently with board members is hurting the company. They need to focus on the issue of H1-B visa which could impact business in a big manner. One hopes that the doyen of Indian corporate governance and one of the most respected companies would set things in order at the earliest.

Elections in India’s largest state is under way and results for UP and four other states would be declared on the 11th of March. These elections are important for parties at the centre and state and results could have an impact on the market in the short term. With central elections still more than 24 months away structural reforms like GST and the move to become a less cash society would keep markets buoyant and in a general upward trend. It makes sense to look at companies which are delivering performance and invest in quality companies. At current levels many of them would be looking expensive but one must remember in a market which is rising, quality gets more expensive as the market PE rises.

In conclusion look for quality and put your bets there.

The week registered strong gains on budget day and that helped in a positive week for the markets. The budget day gains were 486 points on the BSESENSEX and 155 points on NIFTY. The week closed with the BSESENSEX gaining 358.06 points or 1.25% and NIFTY 99.70 points or 1.15%.

It’s been a very long time probably more than a decade that markets have gained on budget day and remained positive thereafter. There was a pre-budget rally as well and the SENSEX has moved from 26,626 at the beginning of the year to the current level. Similar movement on NIFTY has been from 8,185 levels.

The budget this year had to tackle three issues and it appears to have done so. The first was the issue of effect of demonetisation and restoring the confidence of the middle and lower strata of society. The second was the electorate in the five states which have gone to polls starting with Punjab and Goa on Saturday. Thirdly was to kick start the economy. The budget has taken care of all these three issues and gone further in tackling two more burning issues. The first is the electoral funding which has been very well tackled by reducing the limit of cash and anonymous donations to Rs 2,000 from the present limit of Rs 20,000. The second reform which is even more far reaching is the introduction of bonds where the payment of same is by way of digital form and the same in a time bound manner becomes secret as far as the party receiving the same is concerned.

The second is in the case of long term capital gains where the issue of bogus companies assisting people to convert black money to white through huge gains by manipulating prices has been tackled. In case STT is not paid on such allotment of shares they would not be entitled to the benefit of long term capital gains.

Shares of BSE limited listed on the NSE and registered spectacular gains. On Friday the NSE where the shares are listed and located in BKC became Dalal Street and one had the most well attended listing ceremony held. Shares which were issued at Rs 806 in the offer for sale closed at Rs 1,069.20 a gain of Rs 363.20 or 32.66%.

The US is the place to keep your eyes focussed on. President Trump is adding to the volatility in global markets with his announcements. His order about issue of visas to select Muslim countries has been struck down by the courts. Very clearly this is not the end of the tussle which would be there between the President and the judiciary in the four years.

In other news Idea Cellular and Vodafone are in talks to merge and shares of Idea which are listed rose a massive 40.36%. Vodafone is not a listed player. Incidentally shares of Bharti Tele also had a great week gaining 9.34% to close at Rs 353.65. PSU banks had a great Friday and saw huge gains. Union Bank gained 17.45%, while Bank of Baroda, Canara Bank and Punjab National Bank gained between 9% and 11%.

Markets have had a great start to 2017. Take a break as this pace is unsustainable.