The year 2016 has ended with the benchmark indices just about managing to enter the green in the very last week of the year. The BSESENSEX closed at 26,626.46 points, a gain of 508.92 points or 1.91%. NIFTY closed at 8,185.80 points up 239.45 points or 2.93%. The top performing amongst the indices was BSEMETAL up 26.82% followed by BSEOIL&GAS 21.36%. The losers were led by BSEHEALTHCARE down 14.79% followed by BSETECK 10.08%.

Coming to individual stocks the top gainer was Tata Steel up Rs 131.55 or 33.64% at Rs 391.10. This was followed by Power Grid which gained Rs 42.25 or 23.03% to close at Rs 183.45. The losers were led by Sun Pharma which lost Rs 190.25 or 30.21% to close at Rs 629.75. This was followed by Lupin down Rs 354.30 or 23.88% at Rs 1,483.70.

The markets lost ground last week and the BSESENSEX closed at 26,040.70, a weekly loss of 448.86 points or 1.69%. NIFTY lost 153.70 points or 1.89% to close at 7985.75 points. None of the sectoral indices were in the green with BSEOIL&GAS losing the least at 0.25% and BSEHEALTHCARE losing 4.25%.

The Prime Minister spoke at the inauguration of NISM campus near Mumbai on Saturday. “To some extent, the low contribution of taxes may also be due to the structure of our tax laws. Low or zero tax rate is given to certain types of financial income. I call upon you to think about the contribution of market participants to the exchequer. We should consider methods for increasing it in a fair, efficient and transparent way. Earlier, there was a feeling that some investors were getting an unfair deal by using certain tax treaties. As you know, those treaties have been amended by this government. Now it is time to re-think and come up with a good design which is simple and transparent, but also fair and progressive.”

P-notes and GAAR are quite clear. Not quite sure what he is hinting at but he sure wants more revenue from the markets. STT is already there and dividend distribution tax which is effectively a double tax is also there. Further entities and individuals who receive more than Rs 10 lakhs by way of dividend in a single year have been subjected to an additional 10% tax. The presence of the finance minister and his ministers of state as well as the Revenue Secretary Shaktikanta Das makes his comments significant. While this is enough to rattle a market one needs to follow it up more carefully as the immediate assumption may not be correct.

Markets have been worried after the statement and even though FM has assured that this was not the intent, there is nervousness in the markets. Today would be a true test of what people in the market believe. LIC is expected to be a big buyer to prop up the market and send a positive signal but selling by panicky FII’s can knock the wind out of the sail.

December series futures would expire on Thursday the 29th of December. The previous series had expired at a level of 7,965.50 points. The current close is higher by a mere 20 points and this is after the monthly high for the series was 8275 points. This clearly shows that the month has been under pressure. With four trading days to go and a lead of mere 20 points, the series could go in either direction. The fact that markets are currently weak and volumes seem to be falling on lack of serious interest in the markets, the pressure would be on bulls. It therefore makes sense that one should sit out rather than trying to squeeze a rupee here or there from the market.

Stay away and allow the market to settle. Nothing would be lost if one abstains from any trade over the next trading sessions. Enjoy the festivities between Christmas and New Year.