The first week of the new calendar year had all the action one could expect. The week began on a flattish note and bid adieu to 2018. The first day of 2019 began on a negative note and midway did a very sharp U-turn to turn things around and end on a positive note. The next two days were negative and finally Friday, the last day of the week was positive, but not enough to end the week in the black.
BSESENSEX lost 381.62 points or 1.06% to end at 35,695.10 points. NIFTY lost 132.55 points or 1.22% to close at 10,727.35 points. The broader indices saw BSE100, BSE200 and BSE500 lose 1.23%, 1.20% and 1.11% respectively.
Dow Jones which has been having a torrid time saw a huge bounce back on Friday and gained over 700 points on that day. Dow closed the week with gains of 370.76 points or 1.61% to close at 23,433.16 points. The Indian Rupee gained 22 paisa or 0.31% to close at Rs 69.72.
Calendar year 2018 saw BSESENSEX gain 2,011.50 points or 5.91% to close at 36,068.33 points. NIFTY gained 331.85 points or 3.15% to close at 10,862.55 points. BSEMIDCAP was down 13.38% while BSESMALLCAP was down 23.53%. Dow Jones lost 1,580.40 points or 6.39% to close at 23,138.82 points. The calendar year 2018 was a tough one for equity markets and because the benchmark indices, BSESENSEX and NIFTY ended with gains, it is commendable.
Vijay Mallya has been declared an economic offender and the next course of action would be the permission to seize and sell his properties to recover dues. The diamantaire Nirav Modi and his uncle have started singing, stating that they are willing to settle but will not return to India as they fear for their lives. This was a similar tune sung by Vijay Mallya as well. God knows how long they will evade the long arm of the law before things catch up with them as well.
Supreme Court is to reopen the class action suit against Neste India in its case of Maggi Noodles. The company has been accused of having excessive lead and flavour enhancer MSG in its products. The case had surfaced in January 2015. The peak of the share price in January 2015 was Rs 7,425 which fell to Rs 4,990 by February 2016. The share peak in December 2018 was Rs 11,700 which has fallen to Rs 10,878 as of Friday the 4th of January. How long this case would last or come to a logical end is anybody’s guess, but there would be price damage for sure. Depending on the outcome, this share is likely to be in focus till the case gets over. Mumbaikars would recall the harrowing time that they faced when stocks of Maggi were destroyed, and people went without getting Maggi for some time. Whether a similar situation would arise this time or not would depend on what course of action the Supreme Court takes.
One thing is for sure this company would be in action and focus during the supreme court discussion. The price damage and time taken is difficult to assess at this point of time. However at a fall of 25% from the peak level one can take a calculated risk in investing in this company. This investment could be in the form of S I P.
Result season for the October to December quarter 2018 kicks off with two large IT companies declaring their results this week. TCS declares on Thursday the 10th of January while Infosys declares on Friday the 11th of January. IT sector is likely to see muted results this quarter and their share prices were under pressure this week. Similarly another sector under -pressure has been auto as the growth in sales seem to be facing head wind.
The quarter for which results are to be declared saw the NBFC sector experience a liquidity crisis. It would be interesting to see how this sector fares when results are declared. There is expectation in general that results for the quarter will show some positive signs which could help prices stabilise going forward.
Dow had a stellar performance of gaining over 700 points on Friday. This is good enough for us to have a strong opening on Monday. The mood on the street is bearish, and almost 7 out of 10 people will tell you to short the market. If this view remains, markets will gain, and the rally will be on account of short covering. Markets will peak only when the last bear is dead.
Enjoy the rally but be nimble footed.
