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All Time High

Indian benchmark indices Sensex and Nifty touched its all-time high and touched 41809 & 12293 respectively, on positive cues from the global market and FII’s buying. On a weekly basis, Sensex gained 730 points or 1.8% and Nifty gained 187 points or 1.55%.

FII’s bought stocks to the tune of Rs. 4552 crores this week in the cash market, whereas DII were the net sellers.

According to Bloomberg data, investors preference towards large-cap category has increased, due to liquidity problems in NBFC’s, uncertainty in the market, current growth slowdown. Resulting in market capitalizations gap widen, in two decades, between large-cap and mid-cap/ Small-cap stocks, which implies that huge room ahead in quality with mid & small-cap stocks.

Fitch rating on Friday affirmed India’s sovereign credit rating at ‘BBB-‘, with a stable outlook and growth outlook still at solid, as compared to peers, anticipating current FY 19-20 at 4.6% and likely to grow next FY at 5.6%.

TRUMP’s TRUMPET

US President Donald Trump’s comment on near to finalizing trade deal between US and china lifted the market sentiment to a new high today. Though exact details are yet to be announced (later in the evening) and may spur further jump on Monday. 

IPO: The 750 crore Ujjain small finance bank IPO, which was subscribed 165 times, making it the highest subscription in a year, saw a debut with 60% gain (Rs.62 opening against issue price of Rs.37). India’s first exchange-traded fund; i.e. Bharat Bond ETF is launched this week, with the investment strategy of AAA-rated government-owned companies, and with lower credit risk.

Rising food prices, pushed the retail inflation in November to raise three year high of 5.54% which is above RBI’s target rate of 4%, indicates the possibility of a further pause in a rate cut, while industrial sector output shrank by 3.8% in October, due to slow growth.

Indian benchmark indices ended higher on positive cues from the global market. On a weekly basis, Sensex gained 580 points or 1.43% and Nifty gained 190 points or 1.59%.

Market Update

December month started with some negative sentiments in the Indian equity market due to uncertainty in global markets, as well as Indian market, like lowering GDP numbers, Monetary policy outcome, US-China trade war, FII sell-off etc. On a weekly basis Sensex lost 1.19% and Nifty declined 1.36%.

FII (Foreign institutional investor) were net sellers in the first week, to the tune of Rs.2990 Crores, whereas DII (Domestic institutional investor) was the net buyer.

RBI surprised everyone, kept the policy Repo rate unchanged to 5.15% with ‘accommodative’ stance, amid slowdown and increase in the inflation target. RBI also slashed GDP forecast for FY-20 to 5% from an earlier projection of 6.1%.

IPO: the Bumper listing for CSB share, listed 41% up at 275 and touched 51% to mark 307 in a day on 4th Dec, whereas Ujjain small finance bank IPO subscribed 165 times, highest subscription in a year which will make a debut next week. India’s first exchange-traded fund, i.e. Bharat Bond ETF to be launched in this month with the investment strategy of AAA-rated government-owned companies with lower credit risk.

Broker Fraud – is my portfolio SAFE?

It’s shocking to read Karvy Stock Broker’s story this week. What’s the actual fact, the modus operandi, who all have suffered, the quantum? will only come out in due course of time (post the investigation). But my biggest concern is not about these scams (as scams will keep happening in a growing economy), but the speedy trial, or the law & regulators, to take over and act.

  • NSCL scam of 2013 (5000 crores), is still to be resolved & customers refunded their money.
  • PMC Bank crisis, where all the account holders (upward of 50k) are still suffering, with heart-rending stories.
  • Goodwin Jewellers (Gold scheme) scam, still to be traced.

But surprisingly, we have some common threads in all this, and if taken care, will help avoid same. Customers who are stuck in these scams, usually are the ones who wanted higher returns, have disregard to the basics of investment, and above all, didn’t question; as either it’s the GREED which took over, or the HERD mentality of following the others, towards the account opening with these firms.

SIMPLE RULES to follow for any investment account opening:

First, ask as many questions: like, how the returns are generated, its calculation, company founders background, the universal thumb rule on investment basics, etc.

Most Important, nothing comes FREE: hence disassociate from any account or services, offered as free, or on a similar trick, or let say, commission-free.

Second, updated KYC: i.e. ensure that your mobile no & email ID is registered with your Bank, Broker & all your investment accounts. This means that you receive all transactional messages (SMS & Email), as & when it happens.

Third, if something is too good to be true, it’s better to junk it. NSCL scam, I remember, offered very high returns. How can someone generate such returns? Similarly, PMC bank, most of the customers are from just one community. Why just follow others, just because it’s from the same community? Moreover, PMC Bank is a cooperative bank, with a dual regulator, resulting in a lot of grey areas in terms of governance & compliance (which is very well known). We have had many cases of cooperative banks getting into trouble earlier (Madhavpura bank in 2001 going bust, is one such case).

IS MY PORTFOLIO (or account) SAFE?

The answer is Yes (it’s safe), as-long-as you have green ticks on all the above points.

In case you don’t have green ticks on some (or let’s say all), just go back to each account of yours & first update your KYC. Post that, complete the other checks. Now if you are not convinced, go ahead & close your account (& shift to safer investments).

One needs to just learn & adapt … and not worry & panic.


Market Commentary

After months of net selling, FII (Foreign institutional investor) remained net buyers in November month, to the tune of 14,817 crores, whereas DII (Domestic institutional investor) opted for profit booking & were net-sellers.

Today (or Friday), the market witnessed selling pressure due to GDP growth announcement, which is expected to fall below 5% for the first time, since last six years, due to slowing demand, weak IIP data, slump in export, and global slowdown, resulting in further downfall. Sensex settled 336 points down at 40793, and Nifty settled 95 points down at 12056.

The CSB Bank IPO opened with a huge response, subscribed 87 times on Tuesday, and will make a debut on 3rd December, next week

Shares in focus; Reliance industries crossed the 10 lacs crore mark by market capitalization, India-bulls housing finance surged 40% in last three days after regulators gave them clean-chit (did not find any irregularities in loans given to certain entities), and Auto sector gained on scrappage-policy news.

Sensex challenges Naysayers

Sensex is holding onto 40k levels strongly this month, three weeks in a row now, also hitting new highs. All thanks to continuous FII’s inflow, supportive domestic and global cues.

Government’s continuous measures to bring slowing economy on track, offered last week relief to realty sector, which has been performing badly due to liquidity, where Government infused Rs. 25000 crores, along with SBI and LIC, to help in-complete projects.

To save telecom companies, government has given approval to provide two-year moratorium on spectrum payment, which will lead to relief in cash-flow improvement for three major players. Further, tariff hike announcement by three players will help them to improve future revenue.

Towards privatisation drive, the union cabinet approved sale of govt. stake in BPCL, SCI & CONCOR. Also, they have decided to cut shareholding in some public sector firm to below 51% to boost revenue collections, that have been hit by slowing economy.

Zee entertainment share rebounded with 15% jump, after promoters announce to sell 16.5% stake in company to pays dues.

Market Volatility Continues

Indian Benchmark index Sensex and Nifty remained volatile throughout the week, due to domestic and global news, with Sensex still holding 40k plus levels but Nifty lost 12k mark amid quarterly outcomes of companies and slowing factory output, CPI & WPI data.

FII remained net buyer in Indian stock market and infused Rs. 4425.37 crore in the cash segment, whereas DII’s chose to book profit.

We witnessed selling pressure on news that India’s industrial production shrank for the second consecutive month, i.e. 4.3% in September, compared to 1.4% in August. Also, there is a sharp uptick in CPI (consumer price index) to 4.62% in October from 3.99% in September month, which is above target price of RBI (i.e. 4%), with still a hope of small rate cut in the coming month.

Some companies registered positive earnings due to corporate tax rate cut, whereas some lost due to low demand in the economy. Stocks seen rallied are AU small finance bank, HDFC AMC, DLF, Bharti Airtel, ICICI Bank.

SENSEX holding 40K levels

The Indian Benchmark index, Sensex recorded its all-time high i.e. 40,688 this week, and Nifty once again crossed the psychological mark of 12k in this week, due to supportive cues from domestic, as well as global markets.

On Friday, throughout the day market remained volatile, post afternoon we have seen profit booking after Moody’s downgrading India’s outlook to “Negative” from “Stable”, but FY20 outlook remains positive.

FII remained net buyer in Indian stock market, to the tune of Rs.2806 crore in cash segment, whereas DII’s opted for a profit booking.

FM Ms Nirmala Sitharaman’s announcement to boost the economy, Rs.25000 crore funding towards incomplete housing projects (govt. to invest 10000 in AIF, SBI & LIC to invest 15000), boosted sentiments in realty & cement sectors.

Stocks seen rallied are DLF, due to the announcement of funding in the realty sector, Infosys on not receiving any supporting evidence for whistle-blower complaints, and Varun-beverages on strong September quarter earnings.

SENSEX hitting an all-time high

The gloomy & uncertain market since the last few months has turned euphoric, bringing much-needed cheers to the market.

Even though there is buying with the big players, most of the indicators and data points are still below-par. The big players who generally lifts or starts the momentum, usually starts with a possible positive cues (coming soon); like income tax breather (to be announced) for individuals, some more corporate/ equity market sops (to be announced by the government) and above all, the international factors like the upcoming US & China meet in mid-Nov, towards easing of Trade-war further.

Stocks seen rallied are Tata Motors, SBI, Yes Bank, Infosys, TCS etc. Among this, Tata Motors and Yes bank have shown their vertical upward move, closing above 30%, key reason being, the capital infusion.

In terms of data points: Core Sector output shrinks 5.2%, touching fiscal deficit to 92.6%, the unemployment rate in October rose to 8.5% (highest in 3 years), and weakening auto numbers.

Diwali Muhurat Trading – 27th Oct 2019

The one-hour trading session on the Diwali Day is considered as one of the auspicious trading days, to mark the beginning of the traditional Hindu accounting year, better known as “Samvat”. Stock-brokers across the country perform “Chopra Pooja”, by conducting a pooja of the new accounting book, before the start of the session.

This year, Muhurat Trading will be held on 27th Oct 2019, from 6:15 pm to 7:15 pm.

Stock-brokers believe, that buying a small quantity of shares (as per individuals understanding) on this occasion, brings wealth & prosperity throughout the year. Also, these stocks purchased on this day, are to be held for long (many years).

Historically, the market has remained positive in these sessions, with low volumes.

As per ETMarkets.com survey, analysts are largely positive about Samvat 2076, with many expecting Nifty to top the 14,000 marks and Sensex at 46,000 level by next Samvat.

For the Week: Indian equity market remained volatile with anxiety on Assembly Election 2019 in Maharashtra and Haryana, and most important drivers the DII & the FII remains net sellers in the cash market. Quarterly earnings session of companies kept market volatile, with some gains and some losses.

Infosys went down by 15% on Tuesday (single day fall) since last 6 years, dragging nifty and Sensex down, after the whistle-blower complaint, stating manipulation in short term revenue statements against its top management.

We Wish You a Very Happy & a Prosperous Diwali!!!