Markets continued to rally strongly and posted gains of about 3.5%. They are now just about 2.5% away from making a new high. Incidentally Bank Nifty and BSE BANKEX are already at new highs.
BSESENSEX gained 1,352.89 points or 3.69% to close at 38,024.32 points. NIFTY gained 391.45 points or 3.55% to close at 11,426.85 points. The broader indices saw BSE100, BSE200 and BSE500 gain 3.32%, 3.20% and 3.11% respectively. BSEMIDCAP was up 2.48% and BSESMALLCAP was up 2.12%.
The Indian Rupee had a great showing and was up Rs 1.06 or 1.51% at Rs 69.09 to the dollar. This was on the back of the trade deficit narrowing and also strong FII inflows. On Friday the net purchase was Rs 4,300 crs in the cash market of which bulk trade details indicate that one FII, Vanguard bought worth Rs 1,250 crs. Dow Jones was up 398.63 points or 1.57% to close at 25,848.87 points.
There is a hostile takeover bid made by Larsen and Toubro of Mindtree where L&T is looking to acquire the stake held by Coffee-Day. To counter the hostile bid, the promoters of Mindtree have called for a meeting to approve a buyback of shares on Wednesday the 20th of March. The counter would be interesting and worth keeping tabs. The share closed at Rs 946, a gain of Rs 25.05 or 2.72%.
The offer for sale from MSTC Limited for 1.76 cr shares in a price band of Rs 121-128 has been extended. The issue which has a compulsory 75% allocation for QIB’s could garner only 0.79 times of the 1.32 cr shares reserved for them. Overall the issue was subscribed 1.12 times and each of the HNI. Retail and Employee Quota was oversubscribed. Speaks very poorly of the merchant bankers who are handling their first issue. Very clearly if they could not garner Rs 170 crs from QIB’s they should not have become merchant bankers in the first place. Their start has been on an inauspicious note for sure.
The first REIT (real estate investment trust) is being launched with Embassy Office Parks looking to raise Rs 4,750 crs in a price band of Rs 299-300. The anchor book was allocated on Friday and the owner/promoter of Avenue Super Marts, the company which operates D-mart took a 9% stake of the anchor book. The instrument would have returns in the form of interest and dividend with the interest component being taxable and dividend exempt. The two earlier avatars of Invits have not done well probably due to lack of knowledge. While the product looks interesting with expected returns being in the 8.25% -8.5% range, the icing on the cake could be capital gains, On the flip side, concern could be the interest pay-out which is taxable. The issue opens on Monday the 18th of March and closes on Wednesday the 20th of March. The price band is Rs 299-300.
There is another view that investors can make money from the momentum in the market and then invest in such a “Fixed income” instrument after two months or so when markets may have peaked out.
Market believes that the outcome of the election would lead to a stable government and this is reflected in the buoyancy and accelerated buying from FII’s. On Friday the net purchase was Rs 4,300 crs in the cash market of which bulk trade details indicate that one FII, Vanguard bought worth Rs 1,250 crs.
Coming to the week ahead, we have a trading holiday on Thursday for Holi. The possibility of a correction kicking in on Wednesday is quite likely if it has not already happened on Tuesday. Momentum is intact and the markets witnessing healthy volumes with the breadth of the market having improved significantly. There were no sectoral losers last week and the one to gain the least was BSEFMCG up 0.09%.
In such a scenario and setup, it makes sense to ride the rally and use sharp moves to book profits. Stay invested overall the rally is here to stay.
