The week began with markets trading positive. They gained for the first two days, then lost on Thursday and gained again on Friday. The week ended with the BSESENSEX gaining 403.22 points or 1.09% to close at 37,384.99 points. NIFTY gained 129.70 points or 1.118% to close at 11,075.90 points. The broader indices saw BSE100, BSE200 and BSE500 gain 1.35%, 1.38% and 1.52% respectively. BSEMIDCAP gained 2.25% while BSESMALLCAP performed even better and gained 3.32%.
The Indian Rupee gained 80 paisa or 1.12% to close at Rs 70.92 to the US Dollar. Dow Jones on the back of improvement in sentiment on the US China front gained 422.06 points or 1.58% to close at 27,219.52 points.
BPCL was a star performer on the back of expectations that the government may divest its entire majority holding of 53.29% to a strategic partner. This would help the government garner about Rs 47,000 crs at current valuations and help achieve a major part of the 1.05 lakh cr target from divestment in 2019-2020. Shares of BPCL gained Rs 29.85 or 7.87% to close at Rs 408.90. Sister companies HPCL gained 3.495 while IOC was up 2.52%. Further the government ownership in IOC and HPCL would see the control more than 50% of the hydro fuel business. PM Modi’s strong personal relationship with Russian Premier Putin would make Russia a frontrunner in the divestment. Secondly after the acquisition of Essar Oil this would become an extension for them with the retail presence as well. There are more than half a dozen interested bidders including Shell, the erstwhile owner of BPCL before it was nationalised.
The FM held a press conference this time on Saturday, and announced measures to help the beleaguered real estate sector and boost exports. A fund of Rs 60,000 crs has been set aside to assist and provide credit to under construction homes/projects which are not NPA’S nor have gone into insolvency proceedings. A precondition is that 60% of the work be completed in such projects. While one can always complain that more needs to be done or can be done, it is important to appreciate that it is being done.
Strange things are happening in Corporate India. Ousted Chairman of C G Power, Gautam Thapar wants a video recording of the proceeds of the board meeting which ousted him. Similarly, a board meeting held by Manpasand Beverages was not intimated to the exchanges. Naturally the outcome would also not be communicated. The independent Director on the board informed the exchange of the outcome. Subsequently there were disputes about the outcome posted by the independent director raised by the Chairman of the company. I believe it is time for the exchange to step in and haul the company on corporate governance issues. The last word on this is yet to be written.
Markets have an upward bias in the week ahead. Support levels which previously existed at the lows of 23rd August at 36,102.35 points on BSESENSEX and 10,637.15 points on NIFTY have moved to the subsequent higher bottom of 4th September at 36,409.54 points and 10,746.35 points respectively. While the breadth of the market has improved and also borne out by the movement in midcap and small cap stocks, quite a few people believe that the market is ripe to short on every rally. One must remember that FPI’s selling has abated and they have subscribed to the OFS by Apollo Hospitals and the private insurance companies in the last couple of weeks. There is appetite for Indian stocks.
Saudi Aramco’s refinery in Abqaiq was attacked by a group of drones and would remain affected for some time. This attack highlights the vulnerability of plants worldwide and the kind of threat they are now posed by drones. This could lead to a rise in crude oil prices which would be a dampener for India.
The week ahead would trade with a positive bias and selective long positions may be taken. One needs to remember that every rise will be met with scepticism and there would be alternate bouts of buying and selling. This would not be a one way rise in any case. Use dips to add position and wait for the July-September results due in less than 4 weeks from now. Further there could be more announcements from the Finance Minister as well.
