The week gone by began on a subdued note losing on the first two trading days and then gaining on the next three to end the week on a strong note. BSESENSEX gained 850.15 points or 2.42% to close at 36,021.42 points while NIFTY gained 224.35 points or 2.16% to close at 10,607.35 points. The broader market saw BSE100, BSE200 and BSE500 gain 1.95%, 1.77% and 1.63% respectively. BSEMIDCAP gained 0.23% while BSESMALLCAP was the odd one out losing 0.22%.
The Indian Rupee gained 1.03 or 1.36% to close at Rs 74.63 to the US Dollar. Dow Jones gained 623.35 points or 2.49% to close at 25,638.90 points.
Half the calendar year 2020 has passed and it’s a good time to take stock of the broad movement of the markets over the past six months. BSESENSEX began the year at a level of 41,253.74 points and made a high of 42,273.87 points in January itself. Thereafter it drifted before falling very sharply in March and making a bottom at 25,638.90 points. From this low made on 24th of March, markets have been gaining and closed at 36,021.42 points. Broadly speaking they gained 1,000 points in January, then lost 16,600 points till March and since then have gained 10,400 points, making a total of 28,000 points which is about 70% of the base at the beginning of the year of 41,253.74 points. Similar numbers for NIFTY are 12,168.45 points at beginning of year, 12,430.50 points which was the top of the year so far in January, 7,511.10 points the low in March and 10,607.35 points the current value. The total movement here is about 8,300 points which is a similar 68-69% of the value of NIFTY at the beginning of the year. The point being emphasised is the strong movement that we have had so far taking into account the pandemic, tension along the borders and global reasons. With six months more to go one can expect significant change yet to happen.
Ruchi Soya is in the news ever since Patanjali bought the company under the IBC rules. The stock has been gaining nonstop until the beginning of this week. On Monday (29th June) it rose to hit a high of Rs 1,535 and then hit the lower circuit at Rs 1,432. It hit lower circuit on all the five days of the week to finally close at Rs 1,166. Another stock which has been in the news from the Smallcap segment behaving similarly was Alok Industries which hit a high of Rs 61.40 on Friday (3rd July) and then closed at the lower circuit of Rs 55.60. Will Alok Industries follow Ruchi Soya the same way only time will tell. The media had got after these two companies and more so Ruchi Soya and repeatedly questioned the rise in price and why SEBI was not investigating.
Besides the above two mentioned stocks there have been many more where they have risen circuit to circuit and are now being distributed. Its an indicator to become cautious as the people behind the stock having made money are sitting pretty.
KKR has acquired an almost 40% stake in JB Chemicals at a price of Rs 745 per share. The share price of JB Chemicals closed at Rs 718 on Friday. The deal would trigger an open offer wherein KKR would acquire up to 26% of the shares from the present shareholders. The share price of the company has seen a massive upsurge from Rs 425 to the current price of over Rs 700 in the last three months.
The number of people affected globally by covid-19 has reached 115.56 lacs with 5.36 lac people having died and 65.35 lac people having recovered. In India the number of affected people has increased to 6,97,836 people with 19,700 deaths and 4,24,891 people having recovered. India is now the third most affected covid-19 affected nation in the world after USA and Brazil. Compared to the previous week, the world has seen 12.94 lac new patients, 32,360 deaths and 9.80 lac people having recovered. In India we have had 1.48 lac new patients, 3,213 deaths and 1.03 lac people recovering.
Coming to the markets, they continue to gain ground as we have FPI’s and domestic institutions investing in the markets. On days we find either FPI or Domestic institution buying with the other selling, while on some days both are buyers and, on some days, both are sellers. In totality there is net inflow which keeps the momentum and trajectory upwards. How much more and how far is a very difficult call and almost impossible to predict. Suffice to say that the time has come to begin taking money of the table and waiting for markets to decide their future course of action. It would be extremely difficult for markets to continue to gain significantly from current levels without a meaningful correction. Book profits, but refrain from shorting at current levels.
