Markets had a great showing and showed all round gains in the week gone by on expected lines. BSESENSEX was up 607.62 points or 1.68% to close at 36,671.43 points. NIFTY gained 171.90 points or 1.58% to close at 11,035.40 points. BSEMIDCAP gained 2.08% and BSESMALLCAP was up 3.91%. The strong performance by midcap and Smallcap stocks brought many a smile on the faces of small investors who have been on the wrong side of the markets for many months now.
Dow Jones was under pressure possibly with Donald Trump facing heat on the China trade wars and the Mexican wall. Dow Jones lost 576.08 points or 2.21% to close at 25,450.24 points. With Indian markets rallying and Foreign investors putting money the Rupee had a strong showing as well and gained 76 paisa or 1.07% to close at Rs 70.15.
Markets rallied last week on expected lines and midcap and Smallcap led from the front. PSU stocks which were mercilessly beaten down saw huge rallies. The PSU ETF’s which I had spoken of in my column last week saw huge traction. The CPSE ETF and ICICI Bharat-22 had very strong showing during the week and registered strong gains as their underlying shares rallied. In the case of Bharat 22, ITC and Axis Bank also registered significant gains, adding to the underlying value. These ETF’s are likely to continue their momentum as more PSU’s declare interim dividends.
Elections were notified on Sunday the 10th of March. The first round of polls will be held on 11th of April and the final round of polling would be on 19th of May. Counting would take place on 23rd of May. Maharashtra would go to polls in four phases with Mumbai voting in the 4th phase on Monday the 29th of April. With both the exchanges located in Mumbai, it would be a trading holiday as well. With polls notified the model code of conduct would kick in and hopefully leaders of political parties will use better language to address each other, lest they be complained against under the code.
Markets would closely watch the last date of nomination for phase 1 of the elections, which would specify the contours of the maha-gathbandan being formed. It would also be needed to understand the constituents of the UPA as it existed in 2014-2019 and overlap with the maha-gathbandan.
The week ahead sees an offer for sale from PSU MSTC Limited. The issue size is 1,76,70,400 shares and has a reservation of 70,400 shares for employees. The issue consists of 75% for QIB’s, 15% for HNI’s and 10% for Retail investors. The price band is Rs 121-128. There is a discount of Rs 5.50 for retail investors. The issue opens on Wednesday the 13th of March and closes on Friday the 15th of March 2019. The company is into the business of providing e-commerce services providers in the country and is one of the major players in trading of bulk raw material. It has also set up with Mahindra and Mahindra, India’s first and only recycling plant and is in the process of installing a shredder for the same. In its earlier avatar it was known as Metal Scrap Trading Corporation and was a trading company for export of scrap.
Fugitive diamantaire Nirav Modi is back in news for the expensive jacket made from Ostrich hide he was photographed wearing. The rented house in London where he is living in, is estimated to cost him 15 lakhs monthly. The opposition is bound to question the timing of his whereabouts becoming known. The government is pursuing the matter and would like him to be arrested and brought back to India at the earliest. His being arrested and brought back would be another political issue with the leader of the opposition using the two surnames of the PM and the fugitive as being one. Of course the opposition blames the PM for the acts of the diamantaire and his uncle.
Essar Steel has finally found a resolution and is sold to Arcelor. One needs to keep their fingers crossed and hope that no more cases are filed by the erstwhile owners of Essar Steel. The way this group has misused public funds would be an interesting case study in the IIM’s of this country. The deal of Essar Oil with Russia’s Rosneft where Indian lenders were able to recover about 1 lac crs would be remembered by investors. Here LIC had used its clout to squeeze out the extra price from the promoters and held the company’s promoters on tenterhooks. There final consent was needed for the deal to consummate.
Jet Airways plan to manage its resources seems to be seeing the light of day with SBI, Etihad and Naresh Goyal seemingly hammering out a plan of sorts. One hopes that this is also resolved sooner than later as already 20% of the airline’s aircraft have been grounded so far for non-payment to lessors of aircrafts. Amongst the provisions of the plan, Naresh Goyal would step down, his holding reduces to 17% odd, he infuses capital and the lenders with the National infrastructure Investment fund hold 50%. Etihad would increase its stake marginally to 24.9% from the current 24%. There is always a slip between the cup and the lip.
Markets are likely to continue their upward momentum and keep one eye on the election front. This will be a fast-changing scenario as there is just 30 days before the first phase of polling is actually held. Ride the momentum and brace for a day or two of correction as well.
