It was a dream week at the bourses and markets were on a roll. They gained for the first four days and were flat on the final day of trading. BSESENSEX gained 1,213.28 points or 3.47% to close at 36,194.30 points. NIFTY gained 350 points or 3.32% to close at 10,176.75 points. The broader indices saw the BSE100, BSE200 and BSE500 gain 2.89%, 3.32% and 2.48% respectively.
Crude oil prices continued to remain under pressure and Brent crude prices are now under 60 dollars to a barrel. To add to the kitty is the fact that the Indian Rupee appreciated by Rs 1.08 or 1.53% to end at Rs 69.59. Dow Jones to has had a spectacular run and gained 1,252.51 points or 5.16% to close at 25,538.46 points.
November futures expired on a positive note and bulls have not had it so good in a very long time. There were quite a few trading holidays in November and yet the series gained 733.80 points or 7.25% to end at 10.858.70 points. At the beginning of the series the sentiment was negative and with the rupee under pressure and crude on a boil one would never have imagined the outcome.
The G-20 summit saw US and China trade talks making significant headway. US has agreed to freeze imposition of duties for 90 days at the current 10%. In this period China would make efforts to buy more of agricultural produce and industrial goods from USA. It would also make serious efforts on issues of intellectual property theft, non-tariff barriers and forced technology transfer. While this is certainly a temporary truce, intent and action will determine what happens thereafter. As far as markets are concerned it is certainly good news and will add to the current sentiment at the market place.
Prime Minister Narendra Modi presented a nine-point agenda calling on strong and active cooperation among the group to comprehensively deal with fugitive economic offenders. The noose around proclaimed offenders is certainly going to become tighter going forward.
The response to the follow-on offer of CPSE ETF has been spectacular. Looking at the response the government has decided to retain the full green shoe option and raise Rs 17,000 crs from the offer. This amount is higher than the total divestment during the current financial year so far. The anchor portion received bids for Rs 13,300 crs. Prices of the heavyweight stocks in the basket of 11 which comprise the ETF saw big losses during the week particularly the last three days. ONGC was down 7.88%, Coal India down 4.85% and NTPC 4.21% respectively. It would not be unexpected if these three stocks rally strongly when trading resumes in the coming week. Retail participation saw about 1.75 lakh applications, something which has not happened before in an ETF. Clearly the product is being understood and the discount of 4.5% for all participants helped.
Elections would conclude on Friday the 7th of December and there would be exit polls available that evening. The election results would be available from the morning of Tuesday the 11th of December. Markets are aware that the results could be close and has factored some of it. Assuming the worst happens there could be some knee jerk reaction and we could lose all the gains of last week and maybe some more. If they are on expected lines there could be status quo and some amount of profit taking. If it is a clean sweep, markets could rise.
For the moment the truce at Buenos Aires between US and China and the appreciating rupee and falling crude prices would keep the market momentum going. RBI in its credit policy review is likely to keep interest rates unchanged for the time being which would help matters further. Ride the momentum but do take money of the table to take advantage of any adverse election results.
