The markets saw deals happening which just ignited them. Not that it mattered but the way Greece just capitulated and then Iran, saw a great rally on the bourses. Indian benchmark indices gained just about 3%. The Iran deal saw oil prices fall and as consumers immediate effect to coincide with it was reduction in petrol and diesel prices at the pumps.
The Indian markets have just two major concerns currently. The first is whether “Indra” the rain god would be kind on India this year or not, and whether corporate India would rise to the occasion in quarterly results. As far as rain is concerned, though there is a shortfall in the first week of July, it is not out of control as the early surplus rains in June had kicked of the sowing season. Transplanting is some time away and if rains come later it would suffice. On corporate India, the few results declared so far indicate no trend and we remain at best neutral and in fact clueless about the turnaround story.
With crude softening and the rupee trading in a narrow band, all seems well for RBI governor to be positively inclined to rate cut in the August meeting. If at all he does not oblige, the only worry could be on the weather front.
The primary market is likely to see a lot of action in the first fortnight of August and half a dozen companies may tap the market. There is a rule that companies tapping the market from US investors and filing document in the United States must have audited numbers not more than 135 days old. Assuming that these companies going public do so with March 2015 numbers than 15th August is the outer date. Expect plenty of action in the coming days or week. A note of caution however would be the valuations of these companies which is substantially higher and therefore spoils the party. Investors currently are not only wary of high valuations but also not inclined to apply to such issues. Secondly with HNI’s skipping some issues completely, the grey market instrument “KOSTAK” is not traded, and does not bring retail participation. It’s like a marriage party without the band baaja.
Markets may correct in the initial part of the week after a spectacular 3% rise last week, but would thereafter continue their upward move.
