The markets have a mind of their own and react to news flow in a fairly predictable manner. The rate increase by the Fed of 25 basis points in almost a decade saw markets rising into the event. The Dow fell on Thursday and Friday while Indian markets after having reversed the previous week’s falling trend rose for four days before falling sharply on Friday. The BSESENSEX rose 474.79 points or 1.90%, while NSENIFTY rose 151.50 points or 1.99%. The broader markets rose more. Dow Jones fell 136.76 points or 0.79%.
The week ahead has a holiday on Friday for Christmas and banks are closed additionally for a religious holiday on Thursday. This will affect trading volumes and in all probability will see increased volatility. Parliament being stalled has become a routine matter and we are witness to a new form of terrorism where the opposition with less than 8% of the seats has stalled the house for every possible reason. Fortunately some key bills will be passed in the Rajya Sabha in the remaining two to three days of the current winter session but not including the GST Bill. The Congress President and Vice President presented themselves to the court in the National Herald case and were promptly granted bail along with the co-accused and the next date of hearing fixed as 20th February. It’s indeed appalling that the sheer numbers in Rajya Sabha are allowing this kind of continued disruption ever since the new government was elected.
The calendar year has almost run its course for 2015 and the verdict in the 50 weeks is that markets have given negative returns by about 10%. The coming year will be tough with industry yet to perform and the green shoots not translating into higher performances for industry as yet. Secondly the net buying by FII’s was insignificant with the figure likely to be between 1 and 2 billion dollars in equity. What the New Year brings for emerging markets and India in particular is yet to be seen and one can only hope for the best.
The primary market would see the listing of shares of Dr Lal Pathlabs and Alkem Laboratories in the coming week. Also the secondary offering of about Rs 600 crs from Narayana Hrudayalaya in a price band of Rs 245-250 closes on Monday. The response so far is poor with QIB portion subscribed 46%, retail 32% and HNI a mere 2%. The numbers on the last day can change dramatically but the grey market has seen the premium slipping sharply and the same is now in single digit which is not enough to induce the HNI to leverage his position in any great manner.
With Parliament and stalling of that out of the way mid-week it would be interesting to see what steps the government takes to continue to reform India. Not much can be expected from the opposition which is hell bent on destruction and committed to stall growth and progress.
In such circumstances we need to look for key drivers coming from global markets rather than within the country. The Fed has raised rates by 25 basis points and hinted at more in a calibrated manner. The Chinese government has yet to react to what the US has done. It would be of global significance to see what China would do going forward.
The increase volatility likely to be witnessed in the coming days because of lower volumes could be an opportunity for using the same for delivery trades. Use it to make some money in the year end.
