The seat belt sign is on

Cau­tion ad­vised as cur­rent tu­mul­tuous phase shows no sign of abat­ing

Mid Day - - City - ARUN KE­JRI­WAL Dis­claimer:

MAR­KETS be­gan the week on a pos­i­tive note and gained on the first three days of the week. There was cor­rec­tion and profit tak­ing on the re­main­ing two days. BSESENSEX gained 314.74 points or 0.88 per cent to close at 36,009.84 points. NIFTY gained 67.60 points or 0.63 per cent to close at 10,794.95 points. The broader in­dices saw the BSE100, BSE200 and BSE500 gain 0.58 per cent, 0.63 per cent and 0.47 per cent re­spec­tively. BSEMIDCAP gained 0.19 per cent and BSESMALLCAP gained 0.05 per cent.

Stocks

The top sec­toral gainer was BSEFMCG which was up 2.12 per cent fol­lowed by BSECONDUR 1.72 per cent and BSEHEALTHCARE 1.42 per cent. The top sec­toral loser was BSEOIL&GAS down 2.40 per cent fol­lowed by BSEMETAL 0.95 per cent and BSECAP GOOD 0.82 per cent. In in­di­vid­ual stocks, the top gainer was Axis Bank up 7.61 per cent fol­lowed by Aurobindo Pharma 6.21 per cent, Tata Mo­tors 5.59 per cent and ITC 5.22 per cent. The top loser was Bharat Petro down 6.37 per cent fol­lowed by Hind Petro 6.13 per cent and GAIL 4.06 per cent.

Trump

The In­dian Ru­pee lost 77 paisa or 1.10 per cent to close at R70.49. Dow Jones gained 562.79 points or 2.40 per cent to close at 23,995.95 points. The US gov­ern­ment con­tin­ues to re­main shut over the bud­get is­sues with the Democrats un­will­ing to toe Don­ald Trump’s line. The in­sis­tence that he be al­lowed to spend money to build the wall be­tween US and Mex­ico is a ma­jor bone of con­tention. One won­ders whether Trump is right in what he says when the long­est sur­viv­ing wall was brought down with the uni­fi­ca­tion of West and East Ger­many way back in 1989. Hav­ing an­other wall be­tween US and Mex­ico sounds pre­pos­ter­ous in the 21st cen­tury. The cost is es­ti­mated to be 30 bil­lion dol­lars.

Bank

Band­han Bank an­nounced the merger of Gruh Fi­nance with it­self to meet the di­lu­tion norms re­quired as per RBI di­rec­tive. The ra­tio of the merger is 568 shares of Gruh Fi­nance would get 1,000 shares of Band­han Bank. Shares of both com­pa­nies have fallen since the an­nounce­ment which came on Mon­day, Jan­uary 7. Band­han Bank shares were trad­ing at R528.65 on Fri­day, Jan­uary 4 and at R501.10 on Mon­day be­fore the an­nounce­ment came, post mar­ket clos­ing. The share price fell fur­ther to R450 dur­ing the week be­fore clos­ing at R454.15, a loss of R74.50 or 14.09 per cent. Shares of Gruh Fi­nance fell more from R318.50 to R241.65. The low was R228.40. The loss was R76.85 or 24.13 per cent. In­vestors want­ing to be share­hold­ers of the merged en­tity have an ar­bi­trage op­por­tu­nity where they can buy shares of Gruh Fi­nance and get Band­han Bank post-merger at a price of R425 against the mar­ket price of R454.15, be­cause of the ra­tio cur­rently. If one were to buy 5.68 shares of Gruh Fi­nance, one would get 10 shares of Band­han Bank post-merger.

Elec­tions

Both Houses of Par­lia­ment passed a bill that al­lows a reser­va­tion of 10 per cent quota for the poorer sec­tion ir­re­spec­tive of caste or re­li­gion. This would help the up­per castes and get votes for the rul­ing BJP from the up­per caste vot­ers. The stage has been set for gen­eral elec­tions of April-May 2019. In UP, SP and BSP have come to­gether to fight the elec­tions on a com­mon plat­form. Of the 80 seats in UP, each party would fight 38 seats, leav­ing two for other par­ties and the two other seats for So­nia and Rahul Gandhi. At the same time they have also stated that they would have no al­liance with Con­gress in any other part of the coun­try.

Strat­egy

Mar­kets in the com­ing week are likely to be choppy as one has wit­nessed over the pre­vi­ous few weeks. The ten­dency to short the mar­kets on ev­ery rally en­sures that there is short cov­er­ing which takes place after some buy­ing. The strat­egy should be to sell by book­ing prof­its into sharp ral­lies and us­ing dips or cor­rec­tions to buy. Look­ing at the pen­chant to short, mar­kets will not peak very soon.

Arun Ke­jri­wal is founder of the Mum­bai-based ad­vi­sory firm Ke­jri­wal Re­search & In­vest­ment Ser­vices Pvt Ltd.

No fi­nan­cial in­for­ma­tion what­so­ever pub­lished any­where in this news­pa­per should be con­strued as an of­fer to buy or sell se­cu­ri­ties, or as ad­vice to do so in any way what­so­ever. All mat­ter pub­lished here is for ed­u­ca­tional and in­for­ma­tion pur­poses only.

PIC/PTI

BJP leader Shaina NC (left) in Mum­bai cel­e­brates the ap­proval of 10 per cent reser­va­tion for eco­nom­i­cally back­ward up­per castes in gov­ern­ment jobs.

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