Markets post exit polls on Sunday the 19th May and actual results on Thursday the 23rd May went ballistic. They were super volatile and registered sharp gains beside making new lifetime highs. They opened with a gap on Monday with BSESENSEX gap of 770 points and NIFTY gap of 244 points. While a portion of it was covered intraday, this remained a gap. The BSESENSEX made a high of 40,124.96 points and a low of 38,570.04 points, an intra week move of 1,550 points. Similarly, NIFTY made a high of 12,041.15 points and a low of 11,591.70 points for a weekly move of 450 points. Election day results saw the typical sell on news phenomenon and markets after gaining intraday over 1,000 points on the BSESENSEX closed with net loss of 300 points, while NIFTY after gaining 305 points lost 120 points.
BSESENSEX gained 1,503.95 points or 3.96% to close at 39,434.72 points while NIFTY gained 436.95 points or 3.83% to close at 11,844.10 points. The broader markets saw BSE100, BSE200 and BSE500 gain 4.01%, 4.11% and 4.23% respectively. BSEMIDCAP was up 4.45% while BSESMALLCAP was up 5.85%. One should remember the gap up opening on Monday when considering this rise. The broader markets saw BSE100, BSE200 and BSE500 gain 4.01%, 4.11% and 4.23% respectively. BSEMIDCAP was up 4.45% while BSESMALLCAP was up 5.85%.
FII’s were bullish and bought on four of the five trading days. Their net purchases during the week was Rs 5,900 crs. Dow Jones was down 178.31 points or 0.69% to close at 25,585.69 points. The Indian rupee gained 69 paisa or 0.98% to close at Rs 69.53.
Suddenly there seems to be global tension which is taking over the world markets. The China US trade wars seem to be never ending. To top that there is tension between US and Iran, US and Venezuela and now Trump has declared a state of emergency to clear sale of ammunition to Saudi Arabia, UAE and Jordan. UK premier Theresa May is to quit on 7th June as the prime minister after yet another failed Brexit deal. Oil continues to be volatile with so much of geo political action but on a softer trend.
A word on the elections front. BJP crossed 300 and NDA crossed 350. The majority on BJP in back to back elections is a record by itself. The performance in UP where the SP+BSP was soundly routed is testimony to the arithmetic that the BJP used. The fact that Rahul lost in Amethi is a pointer to taking things for granted. Inroads made into Bengal where BJP won 18 of the 42 seats sends jitters up the TMC. The rout of TDP in Andhra Pradesh showed that without performance nothing happens. There will be new equations and in all probability the CM’s of Orissa and Andhra Pradesh would be favourably inclined to the centre if not part of it. For the second time running Congress has failed to secure the leader od the Opposition post which requires a party to win 10% of the seats.
The first part of electing a new government is now over. There is no uncertainty in the same and the mandate is more than crystal clear. The next part is the priorities of the government and its agenda. Very clearly the focus would be on infrastructure creation and the Bharat-mala and Sagar-mala projects would be continued vigorously. This would help in job creation as well. As far as markets go the next agenda would be cabinet formation and then the budget which would be presented in July. As the same government continues, a lot of work on budget has already been done. This year one could see some progress being made on strategic stake sale by DIPAM as well, and this is always welcomed by the markets.
There were a lot of developments in the week gone by. Reliance Capital has sold its stake in Reliance Nippon Asset Management Company to its equal partner, Nippon Life at Rs 230. This incidentally is below the issue price of Rs 252 during the IPO which was done during November 2017.
Naresh Goyal and his wife Anita Goyal the promoters of now grounded airline Jet Airways were not allowed to leave on a flight to Dubai on Saturday. A look out notice was issued against them and the flight which they had boarded was called back and they made to deplane.
The top management of Manpasand Beverages which includes its Managing Director, Whole time Director and CFO were detained under judicial custody by the Commissioner of Excise and Customs, Vadodara, for taking bogus credit of input credit under GST. The company is already under the radar when its auditors resigned same time last year. The share would again be under severe pressure when trading resumes on Monday morning.
The week ahead sees May futures expire on Thursday the 30th of May. The present value of NIFTY at 11,844.10 points is higher by 202.30 points or 1.74%. It’s a clear advantage for the bulls and with the kind of volatility witnessed during the month, bulls should be able to have the upper hand. With election results declared and the uncertainty over the volatility index levels have dropped by almost half and the premiums have significantly reduced. With the benchmark indices having performed and gained significantly, it would be quite logical to now expect the midcap and Smallcap to play catch up. A preview of the same was available last week where one saw these indices gain significantly more and outperformed the benchmark indices.
The rally is not yet over. New highs may take 15-20 days. Invest wisely.
