The markets continued their upward journey even though Friday saw a large correction considering the present mood in the markets. The BSESENSEX despite losing over 220 points closed with gains of 86.11 points or 0.29% at 29,706.61 points. Mid way through the week it had touched the level of 30,007 points. NIFTY closed with gains of 24.55 points or 0.27% to end the week just short of 92k at 9,198.30 points. The momentum continues to be strong and the midcap and smallcap indices outperformed the benchmark indices gaining 0.97% and 1.72% respectively.
RBI kept rates unchanged on expected lines. It however raised reverse repo rates sharply from 5.25% to 6% to suck out the excess liquidity with which banks have been saddled since demonetisation took place with effect from 8th November 2016. This will make the job of banks easier as they were worried what to do with the money lying in savings account of customers on which they had to pay the customary 4% and not be able to deploy the same.
Shares of Shankara Building Products Limited listed on the exchanges on Wednesday the 5th of April and made a great debut.The company had tapped the capital markets with a fresh issue of 45 crs and an offer for sale of 65.21 lakh shares in a price band of Rs 440-460. The issue was very well received and oversubscribed an overall 41.88 times. The issue on listing day closed with gains of Rs172.80 or 37.57% to close at Rs 632.80. By the end of the week the gains had increased to 48.93%.
The new kids on the block are D-Mart the grocery store chain promoted by Avenue Super Marts and Shankara Building Products which is three days old as far as listed stocks are concerned. The entire focus of trading in the market is heavily focused on these two companies. Traded volumes are huge and delivery volumes in just about the beginning of double digits between 8-11%. The price has been moving up steadily and in spurts and D-Mart against an issue price of Rs 299 closed at Rs 750.50. What explains the new found interest is indeed something which needs to be ascertained. However speculation and intra-day play these counters seem to be the hot ones.
All is not well at Infosys and the constant bickering by the former promoters is not in anybody’s interest. For reasons best known to only this disgruntled group they seem to be going to media for ever problem. This should not be the case and as shareholders they should use proper means of communication to write to the board and seek clarifications. In case they are not satisfied even after that there are provisions under the law that can be used. Simply bickering and using the media as a place to wash dirty linen is causing tremendous damage to the company, its stakeholders and also the morale of its employees. It’s high time that this group just “Let’s go” or sells its shares and goes.
Incidentally Infosys would be declaring its results for the quarter on Thursday the 13th of April. Friday is a holiday for the markets and with a long weekend people would like to reduce their positions before the same.
The key driver for the market momentum currently is the liquidity from FII’s and domestic funds. Inflows into mutual funds directly or through SIP’s are at record highs and the money seems like just pouring. In such circumstances one should not expect big corrections in the market unless they are driven by events. Result season for the quarter January to March 2017 would begin this week and go on for the next seven weeks. The markets have factored growth in top lines and would also expect a growth in profits and improvement in margins.
How much of this would be reflected in the numbers as they come would be known once the results are announced. Markets need to consolidate and the best way to reduce risk is to shift from the midcap and smallcap space to large cap where the margin of safety is much more.
