Markets were struggling after four days of trading last week, but Friday turned the tables and saw a very sharp rally. They ended the week with gains of around two percent. BSESENSEX gained 913.52 points or 1.91% to close at 48,782.51 points while NIFTY gained 328.75 points or 2.35% to close at 14,347.25 points. The broader markets saw BSE100, BSE200 and BSE500 gain 2.85%, 3.00% and 3.07% respectively. BSEMIDCAP gained 5.36% while BSESMALLCAP was up 3.55%. In sectoral indices, the top gainer was BSEMETAL up 9.06% while the only loser was BSEFMCG down 0.79%.

The Indian Rupee lost 12 paisa or 0.16% to close at Rs 73.24 to the US Dollar. Dow Jones gained 491.49 points or 1.61% to close at 31,097.97 points.

Markets across the globe seem to be under a massive upward momentum driven by a surge in liquidity and huge investor enthusiasm. Virtually all asset classes are on fire and one hopes that the same does not burn investors when the inevitable correction comes.

What happened in the US at Capitol Hill in Washington DC, is something that at best could be termed as unthinkable, preposterous and an event not associated with a country like the US. Trump supporters laid siege at the Capitol and caused havoc and shook the country. Democrats are now calling to impeach the President, with a mere ten days before he hands over presidency to Joe Biden. Events that have happened are indeed unfortunate. Irrespective of political events, Dow continues to post new lifetime highs.

Anil Agarwal, the promoter of Vedanta Limited has announced an open offer to buy 10% of the company’s equity at Rs 160, a discount of Rs 22.05 or 12.11% to the closing price of Rs 182.05 on BSE at the end of Friday. This is the same individual who just recently bought 5% of the company at Rs 160 and had made a delisting offer at Rs 87.25, a few months back. The delisting offer had failed with not enough shares tendered and the discovered price being Rs 320. Anil Agarwal seems to think he is the only smart person in the market and he wants to have the cake and eat it too. He reduced the book value by charging an impairment of assets and expected investors to tender their shares at a substantial discount to the book value. Having failed, he bought shares at Rs 160. Now he again wants shareholders to tender at a discount when commodity prices have gone through the roof. Wonder whether he is being an over optimistic opportunist or knows something much more than what the whole world knows. Hope the regulator keeps tabs on those who tendered shares in the earlier 5% offer to Anil Agarwal and those who may tender shares now at a discount to him as well. Technical analysts on the street are very bullish on the stock of Vedanta and expect it to rise substantially from here as well.

Friday saw frenzied buying in the last 30-60 minutes after apparently MSCI removed three telecom companies from their index and saw the remaining stocks weightage balanced accordingly. This saw huge rallies and many stocks just went berserk. Whether this would continue when trading resumes next week is anybody’s guess.

TCS began the result season for the October-December quarter with a big bang. The company reported its best ever or strongest 3rd quarter in nine years with revenues growing 5.42% year on year and net profit rising 7.18%. Its revenues were Rs 42,015 crs while profits were up to Rs 8,118 crs. Results were announced post market closing on Friday. The company has also declared a third interim dividend of Rs 6 per share on face value of Rs 1. The stock had closed at Rs 3,120.35. The company had just last month completed its buyback at Rs 3,000 per share.

Infosys and Wipro would be announcing their results in the coming week along with many other companies.

On the covid-19 front, the world saw 9,06,88,733 patients, 19,43,090 deaths and 6,48,11,380 people recovering. In India we saw 1,04,67,431 patients, 1,51,198 deaths and 1,00,92,130 patients recovering. Compared to the previous week, the world saw 51,86,501 new patients, 92,483 deaths and 43,58,462 patients recovering. In India we saw 1,26,140 new patients, 1,512 deaths and 1,45,999 patients recovering. Vaccination is to begin in India from the 16th of January and the country is one of the top contenders for supply of vaccine to the world. Brazil is the latest to ask for supplies.

Coming to the markets, we appear to be in the state of disbelief as far as valuations and rationale go. Stocks seem to be running wild and simply shoot through the roof on huge unseen volumes. While momentum is simply amazing and shocking, it’s also time to be cautious, as these are the cautionary signals one gets before the markets peak. For the records, in two of the last three years we saw markets peaking in January. This happened in 2018 and 2020. In 2020 the peak of January was crossed 10 months later in November.

Further the Union budget would be presented on the 1st of February. The government does not have the comfort of doling out any freebies this time around simply because in the current year the collections have been very poor on account of the pandemic. What can be expected at best is incentives for higher production across sectors. You manufacture, you benefit. You sell, you benefit. The government would incentivise production and consumption to kickstart the economy. Not sure how much of this would be liked or not liked by the market.

Considering what is stated above it makes sense to have a simple strategy of booking profits and improving the risk profile of the balance portfolio. Any person recommending profit taking would be considered to be foolish looking at the present market mood and momentum, but so be it.

Calendar year 2020 has come to an end and it was a spectacular one for the markets, notwithstanding covid-19. The benchmark indices returned gains of 15.75% on BSESENSEX and 15.75% on NIFTY. Bank NIFTY returned negative returns of 2.79%.

The week ended 1st January 2021 saw BSESENSEX gain 895.45 points or 1.91% to close at 47,868.99 points while NIFTY gained 269.25 points or 1.96% to close at 14,018.50 points. BSE100, BSE200 and BSE500 gained 2.01%, 2.09% and 2.21% respectively. BSEMIDCAP was up 2.76% while BSESMALLCAP was up 3.31%. Since around Diwali time in just over six weeks the BSESENSEX has added 4,500 points while NIFTY has added 1,300 points.

The Indian Rupee gained 42 paisa or 0.57% to close at Rs 73.12 to the US Dollar. Dow Jones closed at a new high for the year at 30,606,.48 points. The gain was 406.61 points or 1.35%. The high of the year was 30,637.47 points intraday made on the last trading day of the year. The gains clocked by Dow jones for calendar year 2020 were 7.25%.

NIFTY futures for December series expired on a positive note gaining 994.75 points or 7.66%. Expiry day itself was one of the quietest days witnessed with intraday movement of just 88 points and net gains of -0.20 points. NIFTY has registered gains in the last six series out of seven. The only month in which it was negative was in September 2020.

The issue from Antony Waste Handling Cell Limited listed on the bourses on the opening day of the new calendar year. The discovered price was Rs 430 on BSE and Rs 436.10 on NSE. The scrip touched a high of Rs 492.75 on BSE, before profit taking saw the scrip dip below the opening price and close at Rs 407.25, a gain of Rs 92.25 or 29.29%.

SEBI has passed an order in the 2007 insider trading case of RPL against Reliance Industries, its Chairman and a couple of other entities and cumulatively fined them Rs 70 crs. The Reliance group had filed for consent terms thrice and offered to pay Rs 2 crs and finally Rs 10 crs in 2013 when the 3rd offer was rejected. In 2017, SEBI had asked the company and concerned entities to disgorge an amount of Rs 447 crs which was challenged by the company in SAT. This appeal was overturned in November 2020. This is an order post this appeal being dismissed.

Reliance is India’s largest manufacturing company and has raised a huge amount of money in the recent two quarters for its telecom business from various overseas investors. Readers would also recall that during the thick of covid-19, the regulator SEBI had taken a very pragmatic view and assisted Reliance in fundraising through the largest ever rights issue. Its time Reliance accepts that the regulator is the final authority and needs to regulate companies and settle this case once and for all. One should remember that until this is settled this would always remain as a contingent matter on the books of Reliance Industries and come in the way when corporate governance is discussed. The announcement of the order could have a knee jerk impact on stock prices when trading resumes on Monday the 4th of January.

FII’s continued their aggressive buying and invested Rs 48,223.94 crs in December on a net basis while Domestic institutions sold Rs 37,293 crs. Since the beginning of financial year 2020-21, FII’s have bought in every single month except September when they were net sellers.

On the covid-19 front, the world saw 8,55,02,232 patients, 18,50,607 deaths and 6,04,52,918 patients recovering. In India we saw 1,03,41,291 patients, 1,49,686 deaths and 99,46,131 patients recovering. Compared to the previous week, the world saw 43,60,119 new patients, 78,723 deaths and 31,61,696 patients recovering. In India we saw 1,32,566 new patients, 1,746 deaths and 1,64,986 patients recovering. Vaccination of patients in the world has started and is likely to happen in India as well from next week. The protocols have been issued and various states are gearing up to administer the vaccine in a phased manner. Of course, we have our politicians trying to find a place for themselves as usual by the wrong ways. But this is India.

Markets have had a phenomenal run and many milestones have been achieved in the runup. One more remains with BSESENSEX waiting to touch 48,000 level. Once that is achieved and post the fireworks from Diwali to Christmas and New Year, it would be time for consolidation and digesting gains of this run-up. While this does not suggest that markets would correct sharply, it does imply that the direction of markets is likely to turn sideways and become less volatile. Investors would wait global cues, fresh allocation of funds, the swearing in of Joe Biden and how the Democrat administration views global challenges. All of this would take a couple of weeks before clarity emerges.

In such times it would be appropriate to encash huge gains made in the market and await buying opportunities.