The week gone by was choppy and volatile. The first two days of the week saw the BSESENSEX lose 653 points and then over the next three days recover 655 points. The net weekly change was a mere 2 points but intraweek it was effectively 1308 points. Similarly the NIFTY lost 184 points and then recovered 196 points to close at a net change of 12 points and intraweek movement of 380 points. It appears as if this week was two distinctive periods.
Expiry of July futures happened on 30th of July with the bulls just about having the day. The series ended at 8,421.80 points, up 23.80 points or 0.69%. It could be said that bears gave them a run for their money and in the end the bulls were ahead simply because they have those huge horns which went ahead.
In primary market news, Syngene International Limited IPO was oversubscribed 32 times. The company had an offer for sale of 2.2 cr shares in a price band of Rs 240-250. The OFS from PFC saw a unique feature introduced of retail investors allowed to bid at ‘cut-off’. While in theory it is a great concept and has worked successfully in a price band scenario, it failed miserably in this case. The cut off which was the lowest price at which shares were allotted to the non-retail category was Rs 254.10 while the allotted price for retail category was Rs 261.90. Retail investors felt cheated at the end of the whole issue as first they had to make arrangement of funds and secondly not one of them got allotment. The consolation if any could be the fact that shares were available cheaper than Rs 254.10 less 5% discount a day later itself. Even as of Friday the closing price was Rs 245.85 which is an effective discount of Rs8.25 or 3.25%. The scheme meant for retail investors has certainly come a cropper.
The government has decided to recapitalise banks to the extent of Rs 70,000 crs over the next four years and would infuse about Rs 25,000 crs this year (2015-16). This news saw the public sector banks rally strongly. Bank of Baroda was the star performer up Rs 24.35 on Thursday and Friday post this announcement. On a weekly basis the gains were slightly less at Rs 22.20 and 14.30%.
Petrol and diesel prices have been cut again and the FM must be feeling relieved at the crude price and also gold prices which have been falling. The local gold price including the 10% import duty has fallen below Rs 25,000 and is a welcome sign. On the positive side the greater thing is that even with the lower price, demand has not surged.
RBI meets for its monetary policy review on Tuesday the 4th of August. Till Wednesday evening there was no talk of an imminent rate cut even though the optimists always expect one. Post the banking fund infusion announcement the street is expecting some sort of a cut. The street is actually divided with half expecting and half not. Some sort of rate cut is priced into the market. Whether it materialises or not is just over 24 hours away and if it does happen and market reacts it would be after a strong rally particularly on Friday which saw markets gain close to 1.4%
World cues, quarterly results and Tuesday’s decision would be the drivers for the week ahead. Choppy and volatile is the outcome expected.
