Markets began the week on a positive note and registered gains. They lost ground on the remaining three days of the week and ended with losses. BSESENSEX lost 476.14 points or 1.34% to close at 34,981.02 points. NIFTY lost 155.45 points or 1.46% to close at 10,526.75 points. The broader indices too saw losses of between 1.14% to 1.27% on the BSE100, BSE200 and BSE500.
The Indian rupee gained significant ground on the back of crude falling. Crude has fallen below the 60-dollar mark which is a one year low. The Rupee gained 1.25 Rs or 1.74% to close at Rs 70.67. Dow Jones lost 1,127.27 points or 4.44% to close at 24,285.95 points. On a year to date basis the Dow Jones is now down 1.75%.
The week ahead sees November futures expire on Thursday the 29th. The current value of NIFTY of 10,526.75 points means that the bulls have a lead of 401.85 points or 3.97%. It is enough for the current moment and gives the bulls the leeway to pull this series through. They can afford to lose a hundred points daily and still survive. Incidentally in the previous week they lost on three of the four trading days and were able to contain the losses at 155 points. This time around they have four trading days and 400 points to defend. Should be defendable.
The next tranche or Follow on Offer of the CPSE ETF opens for subscription on Tuesday the 27th of November. The issue size is Rs 8,000 crs and has a green shoe option of 6,000 crs. There is a discount of 4.5% for all investors. Further there has been tweaking in the composition of the ETF, with construction and renewable energy being introduced for the first time. The current composition has 11 stocks against the earlier 10 with four additions and three exclusions. One must also consider the fact that public sector companies are high dividend paying companies and the dividend yield of public sector companies is between 3-4 times that of the NIFTY average. With low valuations and reduced interest in PSU shares currently, this offer looks attractive.
With crude prices having fallen below 60 dollars to the barrel and now trading at a year’s low and consequentially the rupee appreciating quite sharply, things couldn’t be better. There is one cause of concern at to how some stocks have crashed in the US. Apple the I-Phone maker and currently one of the most prized companies in the Dow Jones has had a price range of 150.24 dollar to 233.47 dollars. The high was made as recently as about a month ago and the share is currently trading at 172.29. The share has lost over 61 dollars in under a month and this is close to 30%. This share is a company which sells products, telephones, computers and watches. A company like this with so much of respect not in the USA but globally, means some serious issues are there which probably most people are not aware. The point I am making is that the trade war is hurting al countries. It’s not just China and therefore markets are worried.
Economic data is due in the week ahead and of interest would be the GDP numbers for the second quarter. While they are expected to provide positive upside, the current focus is the elections and their results thereafter. Markets will continue to be volatile and take cues from overseas markets particularly Dow Jones in the week ahead. The strategy of buying on dips is being reviewed as any sharp dip from here could make the market vulnerable and weak. We would then have to allow the market to find its base and consolidate at lower levels. The new strategy would be selling on rallies and wait for buying opportunities. Secondly with expiry due, there could be roll-over pressure on Thursday.
Trade cautiously.
