The week gone by was a great one for the markets as they gained on all five trading days of the week. This has not happened in a fairly long time while the converse of them losing on all five days has been happening. Probably the mood for Diwali is being set. IRCTC listing on Monday launched the week.
BSESENSEX gained 1,171.30 points or 3.07% to close at 39,298.38 points. NIFTY gained 356.80 points or 3.16% to close at 11,661.85 points. The broader indices saw BSE100, BSE200 and BSE500 gain 3.45%, 3.58% and 3.55% respectively. BSEMIDCAP was up 4.64% and BSESMALLCAP was up 2.78%. It is after a long time that one saw the market breadth improve significantly. Stocks across sectors have gained.
The top performing sector was BSEAUTO which gained 7.88% while the worst performing was BSE IT which lost 0.08%. The top gainer in individual stocks was Yes Bank which has been on a downward trend from March 2019 from a level of Rs 285 to Rs 29 in October 2019. The stock gained 29.80% to close at Rs 51.40.
I have been a very strong advocate of PSU stocks and have been writing about them regularly in my articles. Have been advocating holding them in one’s portfolio. The two PSU ETF’s had a stellar performance for the week. Units of Bharat 22 the ETF managed by ICICI were allotted at Rs 33.68 in the recent FFO. They have gained Rs 1.52 since the allotment. The gain during the week was Rs 1.35 or 3.99%. CPSE ETF gained Rs 1.60 or 6.93% during the week to close at Rs 24.69. The fundamentals of PSU stocks are without doubt and the moment fresh supply stops, they gain.
Shares of IRCTC listed on Monday and made stellar gains on expected lines. Shares were issued at Rs 320 and they closed on debut day at Rs 728.60, a gain of Rs 408.60 or 127.69%. Delivery on day one was 154.11 lac shares which was 76.44% of the IPO size of 201.6 cr shares. Shares of IRCTC gained further during the week and closed at Rs 779.20. This is the best performance by any PSU stock on debut day ever and probably would rank as the top three in all stocks.
The other IPO to list was from Vishwaraj Sugar Industries Limited which closed with gains of 50 paisa at Rs 60.50 against the IPO price of Rs 60.
Dow Jones gained 32.36 points or 0.17% to close at 26,847.95 points. The Indian Rupee lost 12 paisa or 0.17% to close at Rs 71.14 to the US Dollar.
Corporate results seem to be doing well but they should be factored in after taking cognizance of the lower tax to be paid as a result of the change in corporate taxes announced by the Finance Minister. In the quarterly results for the period July to September 2019, the tax rate gets skewed as the benefit of the lower tax rate appears to be significantly higher as the benefit of the previous quarter tax rate is adjusted.
Markets begin with a trading holiday on Monday on account of state elections in Maharashtra and Haryana. Both the exchanges are located in Mumbai and hence the holiday becomes mandatory. The mood seems to be changing, though slowly. The penchant to short the market has not yet gone and the markets still have its bogey stocks which continue to be under selling pressure. The rebound in Yes Bank is one such example.
There is expectation that the income tax rate cut for individuals is expected any day and was delayed on account of the model code of conduct on account of state elections being announced kicking in. With elections over on Monday, this announcement could happen any day soon and be a Diwali bonus to the citizens. This could help change the mood further in the market place.
Muhurat trading for Samvat 2076 will be held on Sunday the 27th of October.
With the breadth in the market improving and corporate results improving on account of the tax cut in corporate tax, things are looking brighter. The cleansing of the system where corrupt corporates have been booked and brought to task is painful in the short term but indicates the mindset of the government and the resolve to cleans the system. Markets are likely to maintain their upward stance and with FPI’s having stopped their selling spree, things would get better going forward. Look for value to add to your positions in the markets. While there would be corrections on and off, the continuous downtrend looks to be a thing of the past.
Happy Diwali.
