It was a week of gains on Dalal Street even though they were significantly less than the previous weeks. The BSESENSEX gained 93.73 points or 0.335 to close at 28,334.25 points while NIFTY gained 52.60 points or 0.60% to close at 8,793.55 points. The biggest sectoral gainer was BSECONDUR up 5.20% while the biggest loser was BSEMETAL down 1.64%. Similarly in individual stocks the biggest gainer was BHEL up 10.37% whilst the biggest loser was SAIL down 5.49%.
The Indian rupee gained 43 paisa or 0.64% to Rs 66.88. Dow Jones rallied smartly to gain 197.91 points or 0.99% to close at 20,269.37 points. The world is struggling to adjust to Donald Trump’s policies and so is the American administration which has turned down some of his acts like travel ban.
Results for the quarter are better than expected especially in light of the ban on high denomination notes which happened on the 8th of November. This effectively chopped off eight weeks in the quarter and affected liquidity in the system. Despite the impact, results are fairly robust and give a sense of confidence about the economy.
Markets are positive and have maintained the momentum on account of positive inflows from domestic investors on the back of inflows into mutual funds. These flows have balanced the outflows of FII’s. The past fortnight has seen that FII’s have turned buyers as well. Going forward if FII’s and domestic institutions both remain positive and inflows continue we could see sharp gains in the market as well.
RBI and the money market committee decided by a 6-0 verdict to keep rates unchanged. The markets reacted as they know best when the unchanged rates were announced. They recovered thereafter and closed with minor losses. The minutes of the meeting show that going forward rate cuts happening seem over. The positive fallout of this would be inflows into debt from foreigners who were pulling that out as well should happen. With interest rates set to rise in the US, it would have become even more difficult as the differential would have narrowed if rates were cut here. With flows likely in equity and debt the currency would also appreciate and become more stable.
All is not well in Infosys. The founders are unhappy with the board. Whether this is because they no longer have control or what one does not know, but what is happening is certainly not good for the company. Precious bandwidth is being wasted in handling non-core issues and is demoralising to the top management. Readers would recall that in the last few years there have been many such issues where top management has left suddenly. The issue currently with board members is hurting the company. They need to focus on the issue of H1-B visa which could impact business in a big manner. One hopes that the doyen of Indian corporate governance and one of the most respected companies would set things in order at the earliest.
Elections in India’s largest state is under way and results for UP and four other states would be declared on the 11th of March. These elections are important for parties at the centre and state and results could have an impact on the market in the short term. With central elections still more than 24 months away structural reforms like GST and the move to become a less cash society would keep markets buoyant and in a general upward trend. It makes sense to look at companies which are delivering performance and invest in quality companies. At current levels many of them would be looking expensive but one must remember in a market which is rising, quality gets more expensive as the market PE rises.
In conclusion look for quality and put your bets there.
