The last week of calendar year 2016 was dramatic. The week began with the after effects of PM speaking about capital market not contributing enough to the exchequer. The remaining days saw a smart corrective rally, followed by expiry short covering that saw finally the benchmark indices closing in positive territory for the year. Had it not been for this last week rally 2016 would have seen the BSESENSEX and NIFTY close in negative territory.
The BSESENSEX gained 585.76 points or 2.25% to close at 26,626.46 points. NIFTY gained 200.05 points or 2.51% to close at 8,185.80 points. The BSESENSEX gained 508.92 points or 1.91% for the year at 26,626.46 points. NIFTY gained 239.45 points or 2.93% at 8,185.80 points. Amongst SENSEX stocks the top gainer was Tata Steel and the China meltdown in the first week of January 2015 was on account of commodities and the China slowdown. The best performing among sectoral indices was BSEMETAL up 26.82% on a yearly basis whilst the worst performer was BSEHEALTHCARE down 14.79%. The pharma companies were at the receiving end as far as US FDA was concerned and large and even midcap companies were under the scanner.
The December series futures expired on a strong note. The series expired at 8,103.60 points, a series gain of 158.10 points or 1.73% at 8,103.60 points.
The government has signed a DTAA (double taxation avoidance agreement) with Singapore. This is the third in the series after similar agreements with Mauritius and Cayman Islands. The government has agreed to grandfather investments till 31st March 2019. From 1st April 2019 all capital gains would be taxed at 505 of what they are in India. This would be a very positive step as a large amount of investments flows into India from Singapore which is considered a straight forward country. There could be a knee jerk reaction in the short term but this is positive from a long term perspective.
The PM addressed the nation after the 50 day period of depositing demonetised notes expired. While people expected that he would announce some new measures it was all about thanking the people and bearing the pain. Some measures for housing loans, assistance to pregnant women and fixed interest to senior citizens were announced.
Interest subsidy of 4% for loans of up to 9 lacs and 3% for loans up to Rs 12 lacs were announced for purchase of a home or additions/repairs to an existing home. This loan could be from a bank. Housing company or an NBFC. Similarly senior citizens could invest upto Rs 7.5 lacs in a fixed deposit which would bear a fixed rate of interest of 8% for ten years. The person could withdraw the interest on a monthly basis which means the interest component of 7.5 lacs of Rs 5,000 could be a source of income for the citizen.
Political drama in UP was at its high. Mulayam Singh Yadav sacked the Chief Minister of UP and his son from the party and the very next day took him back. The third day the national convention of the party appointed the ousted and reinstated son as the party president. What better way of stage manging drama and handing over the baton to the son. Hope some other parties who are trying to hand over charge learn from this. The UP drama would be in the news for quite some time as it was a bloodless coup of sorts with all rebellion put at rest for the time being. The new supremo has been anointed.
Some of the sectors I like are the housing sector which includes housing finance companies and NBFC’s. The second sector is healthcare and finally consumer discretionary and non-discretionary. More about these sectors in detail next week.
The year ahead would be a tough one for the markets at least in the initial stage. I believe we would lose ground from the opening level and there would be recovery thereafter. This recovery would see the benchmark indices ending in the positive for the markets.
