The Week gone by began with a trading holiday on Monday. Coincidentally India and the US both were closed on that day. There was a joke in Mumbai that the holiday was to immerse Lord Ganesh, but Mumbai got immersed instead. Trading began on Tuesday on an extremely weak note. The merger of PSU banks probably did not go down well with the markets or they expected more than just this. Either way Tuesday was really weak. The remaining three days saw the market alternating between gains and losses. Come Friday, there were again expectations of yet another press conference and markets gained with BSESENSEX up 337 points and NIFTY up 96 points.
BSESENSEX lost 351.02 points or 0.94% to close at 36,981.77 points while NIFTY lost 77.05 points or 0.70% to close at 10,946.20 points. The broader market saw BSE100, BSE200 and BSE500 lose 0.77%, 0.76% and 0.68% respectively. BSEMIDCAP was down 0.76% while BSESMALLCAP was up 0.48%.
Dow Jones gained 480.64 points or 1.83% to close at 26,797.46 points. The Indian Rupee was under pressure and lost 32 paisa or 0.45% to close at Rs 71.72 to the dollar.
India Mangalyaan -II continues to orbit the moon and it appears it has the necessary fuel to do so for about seven years against the earlier one year talked about. The lander ‘Vikram” lost contact with the mother ship and space control when it was 2.1 km from the moon’s surface. While all efforts are being made to revive contact and find out what went wrong, the fact that India could do so in its maiden attempt is itself a super achievement and puts the country in the top super league of nations having such capability. The lander has been located and pictures of the same have been received from the orbiter, however contact is yet to be made. ISRO has another 13 days to do so as than it would be night on the moon and remain so for the next 14 days. Seeing the achievement, the day when we would have an Indian on the moon’s surface is certainly not far. Another important point to remember is that this mission has been done at a fraction of a cost of what other countries have spent. The India mission was under Rs 1,000 crs while others have spent between Rs 19,000-20,000 crs. This also was a more complex mission as it involves an orbiter and a lander with a rover.
The government has announced the setting up of a task force that would identify infrastructure projects which are technically feasible and financially/economically viable and can be initiated in 2019-2020. The minimum size would be Rs 100 crs and the target is to achieve investment of Rs one lac crs in such projects by 2024-2025. This would help India get closer to its target of becoming a five trillion economy by the end of 2024-2025. More importantly such a massive drive would also ensure consumption, demand and job opportunities. This would kick-start the economy and help revive demand in many sectors as well. Once projects are announced it would impact steel and cement followed by a host of other sectors.
Auto sector is seeing one of its worst slowdowns in recent decades. Market men and industry watchers expect that GST would be cut to boost demand. The Finance Minister has made it quite clear that it is for the council to take a call on the same as GST affects states and centre both. It can only happen if the majority of members of the council agree. This could be a tough order simply because manufacturing of automobiles is confined to a handful of states while consumption is across all states. Many manufacturers have started offering vehicles with BS -VI norms to beat the deferment of purchases. While BS -VI vehicles are expected to be more expensive they are currently being offered at par to the BS -IV vehicles.
Market will have plenty of news flow particularly its expectation of measures to revive the economy from the centre. First there would be expectation of a press conference, then the agenda of the conference concerning a particular sector or group of sectors and then the actual announcement. These expectations will keep the market on tenterhooks before the quarterly results for the period July to September start kicking in in four weeks’ time. It would be important to see which sectors in general and companies in particular have been able to withstand nature’s fury of raining with a vengeance. We had a delayed monsoon and then large parts of the country had unprecedented floods. The next press conference is likely to see measures concerning the real estate sector being addressed.
Markets in the week ahead will hope that the US China trade talks take shape and result in some positive outcome. It’s now getting close to one year since the dispute began. The BSESENSEX has good support at the low of 36,102.35 points made on 23rd of August, followed by a higher bottom at 36,409.54 points on 4th of September. Similar levels on NIFTY were at 10,637.15 points on 23rd August and 10,746.35 points on 4th September. If these levels continue to hold in the next 10 days or so, we should be well on our way to recovery in the immediate term. Secondly even if FPI’s discontinue their selling spree things should be fine. So, we have three positive possibilities to look for in the coming weeks. Let’s hope for the best.
