The week gone by was one of consolidation and markets were more circumspect after the massive rally in the previous week. The BSESENSEX gained 71.51 points or 0.29% to close at 27,717.99 points while NIFTY gained 24.85 points or 0.33% to close at 7,510.20 points. The budget disappointment and then the realisation that it is growth oriented and aiming towards infrastructure and agriculture saw markets gaining ground.

Parliament has started functioning and they have started doing legislative business and not just sloganeering and disruption. AADHAR bill has been passed and under this this would be mandatory to received subsidies of any kind direct from the government. This bill or instrument has helped cut down leakages in the system which was crippling the economy. The intention of giving aid, assistance or subsidy was well meant but leakage along the way ensured that the intended beneficiary got a trickle of what he was supposed to get.

The week ahead will see the US Federal Reserve take a call on what should be done with interest rates going forward. Our own RBI would be meeting in the beginning of April to review the monetary policy and take a call on reducing rates if any.

OFS or offer for sale of the Government of India seems to have its share of controversies each time there is an offer. This time in the case of CONCOR (Container Corporation) retail investors who bid at cut-off were left high and dry and got no allotment whatsoever. Its providence that they did not get allotment as the share subsequently tanked and fell below even the 5% discount price. The very idea of cut-off is the price at which shares are allotted and announcing the same before bidding begins based on the nonretail book is misleading and self-defeating. This is so simply because the nonretail portion does not include a discount and there would be enough people willing to sacrifice a portion of the discount to be allotted shares. I suggest that in future the stock exchanges and the regulator must come to common ground and ensure that the cut-off price is finalised based on bids received at the end of the bidding period. This would ensure that the price is equitable. It may also be mentioned that in almost all cases this discovered price which would then become the cut-off price would be higher than the non-retail portion.

Vijay Mallya is all over media and his leaving the country is attracting attention. The wilful defaulter tag is not helping and numerous charges of fund diversion are doing the round. What will be the outcome is certainly not known but this is an issue that would be there for quite some time. The heat on other wilful defaulters is certainly going to increase.
Markets would remain choppy in the week ahead and trading opportunities would exist. Trade cautiously.

The budget was presented a week ago and whether it was good bad or ugly is borne out of the fact that FII’s who the mainstay of our markets are have turned bullish. They have been sellers for quite some time and bought on the remaining four days of the week after the presentation of the budget. The BSESENSEX rallied 1,492 points or 6.44% to close at 24,646.48 points. From the low on budget day the rally is even stronger as the BSESENSEX gained 2,000 points. The NIFTY gained 455.60 points or 6.48% to close at 7,485.35 points. The rally has been strong, widespread and almost everything gained. So far so good.

World markets rose led by the Dow Jones which gained 366.80 points or 2.2% to close at 17,006.77 points. By and large the markets have appreciated the budget on three broad factors. Firstly the fiscal maths or discipline is in place. Secondly there is a push for infrastructure spending to spur growth with a complete rural focus and thirdly the government wants compliance and transparency. Keeping this is as the central theme, it is believed that with two consecutive failed monsoons things should be better. The monsoon is expected to be much better this time around. If that does happen the multiplier effect of demand and consumption will drive growth.

The reason why FII’s have turned bullish on India is the realisation that hardly any countries are projecting a growth of 7% or thereabouts. India is projecting that and its expectations are borne out and sort of validated by World Bank. Crude prices seem to have bottomed out and have moved upwards. This is welcome news for global markets.

Having rallied so much in just four days we need to consolidate and a correction will be more than welcome. The next event as far as India is concerned is a rate cut in April when RBI meets. Markets will be choppy and should hopefully have an upward bias from here on.