There is a crisis brewing in Crimea where a referendum was held yesterday to decide whether it wants to remain with Ukraine or secede to Russia. USA and European Nations have threatened to impose sanctions on Russia in case they take Crimea. There has been a lot of muscle flexing and Russian markets have fallen quite sharply. One is not sure how far this cold war could go on but surely global markets have caught a cold and are sneezing. Gold prices have risen quite sharply to around $ 1,385 an ounce.

In India our markets also did react initially but recovered sharply. The bigger drivers in India are of course the Lok Sabha elections and the fact that FII’s are bullish on the post-election status is helping. They seem to have taken into their stride the fact that there would be a change in government and are quite prepared for it. Even if god willing there is some unclear mandate the fact that the economy has grown at sub 5% gives the comfort that the worst is almost over and things would not deteriorate from here.

The government continued with its divestment in a different form asking ONGC and OIL India to acquire 5% stake each in IOC (Indian Oil). The sale was at Rs 220 per share which is a discount of Rs 49.20 or 18.27% to the closing price of Rs 269.20 on Friday at the BSE. The divestment has fetched the government Rs 5,340 crs.

Continuing with the divestment, subscription opens for the CPSE (Central Public Sector Enterprises) ETF (Exchange Traded Fund) on Wednesday the 19th of March and closes on Friday the 21st of March. There are ten stocks which form part of this basket or index and their value as computed on Friday the 14th of March stood at 1,874.35. Units would be allotted at the weighted average price of these stocks over the next three days when the fund subscription is open. There would be a 5% discount for retail investors and a loyalty bonus of 1/15 unit if investments are held for a one year period. The units would be sold at 1/100th of the NAV which means the price would be 18.74 less discount as of date.

The government will sell no more than 3% of the equity of these companies. The companies which form part of the index include BHEL, Coal India, CONCOR, Engineers India, GAIL, IOC, OIL India, ONGC, PFC and REC. The basket has 59% weightage in energy and all these are dividend paying companies. The concept looks good as it prevents market players whether traders or institutions from hammering the prices each time talk of an FPO, secondary offering or even OFS about a PSU company was there. One has seen in the past that stock prices fell quite sharply on such talk. This is yet another experiment in divestment and on the face of it looks far better than the previous attempts and certainly far better than asking LIC or similar PSU companies to take shares and have cross holdings.

Elections are becoming interesting and the ruling Congress Party must be wondering what went wrong in Andhra Pradesh and Telengana. TRS led by K Chandreshakara Rao has refused to join, merge or support the Congress in Telengana for either the Assembly or Lok Sabha elections. Its chief minister of combined Andhra Pradesh has formed its own party while the son of the late Chief Minister has his own party. Against a total tally of 33/42 MP’s, this time around the situation looks quite bleak at current assessment. The Congress would be more than happy if they are able to achieve even double digit seats in the state.

The new kid on the block of Indian politics has threatened to put all journalists in jail. How somebody who has grown on media coverage and is a party full of ex-journalists could make such a statement?

Or is it yet another ploy to be in the news. One fails to understand what this party is up to but since the statement there has been some slowdown in media coverage. Media is retailiating and many have begun a boycott of the party.

With the last date for nominations to the first round of voting coming close, it’s a matter of time before the final alliances, seat adjustments and final list of candidates would be available. One must remember that this would be pre-poll and post poll there could be a new scenario depending on how the major parties have fared and how they stack up in the 543 member house.

Russia, Ukraine, Crimea or sanctions would have some bearing but politics and politics in India would be the main driver. As long as FII’s are bullish and continue to invest, there would be fewer issues in India. Markets would be volatile but remain buoyant. The direction however is generally up and the previous hurdles of 21,350-21,500 on the SENSEX and 6,350-6,400 on the NIFTY would act as major support.

Expect new highs as long as Crimea does not become a major crisis.