Bombay Stock Exchange. (File Photo: IANS)

Markets may consolidate in Expiry week (Market Watch)

By Arun Kejriwal

The week began on a positive note with the indices making new lifetime highs and doing so on every day of the week. The BSESENSEX gained 671.83 points or 1.64 per cent to close at 41,681.54 points while NIFTY gained 185.10 points or 1.53 per cent to close at 12,271.80 points. The broader indices saw BSE100, BSE200 and BSE500 gain 1.46, 1.31 and 1.25 per cent, respectively. BSEMIDCAP was up 0.04 per cent while BSESMALLCAP was up 0.44 per cent.

Markets lost on Monday but gained on the remaining four days. The new intraday highs made on every day of the week saw BSESENSEX register intraday levels of 41,185, 41,401, 41614, 41719 and 41,809, respectively. NIFTY saw levels of 12,134, 12,182, 12,237, 12,268 and 12,293 points, respectively.

Dow Jones gained 319.71 points or 1.14 per cent to close at 28,455.09 points. The Indian Rupee lost 31 paisa or 0.44 per cent to close at 71.12.

The Delhi High Court has asked Reliance Industries to submit a list of its assets after it failed to honour an international arbitration award of 4.5 billion dollars to the government. This effectively would put a spoke in the proposed divestment of 20 per cent to Saudi Aramco. This would not affect the deal with BP which has proposed to invest 49 per cent in the retail distribution of fuel and hydrocarbons. Reliance share price has been on a roll and are at lifetime highs. They gained Rs 17 or 1.07 per cent to close at Rs 1,599 after touching an intraday high of Rs 1,618 during the week.

Bajaj Finance has invoked its pledge on 24 lakh shares or 10 per cent of Karvy Data Management Services Limited for loans it had made to Karvy Stock Broking. Similarly, ICICI Bank has invoked a pledge on 45 lakh shares amounting to 18.75 per cent of the company. Karvy Data Management Services Limited had reported consolidated revenues of Rs 1,274.39 crore and profit after tax of Rs 75.20 crore for the year ended March 2019. The company is an unlisted company.

SEBI is mandating an upfront margin for retail investors with effect from 1st January 2020 for retail investors. In light of what has happened in Karvy and a Kolkata-based broker in recent times, investors are wary of now giving power of attorney to brokers.

What is surprising is the lax action taken by the regulator in the above case. The act committed by Karvy is tantamount to fraud as he has ‘stolen’ shares from the accounts of customers and given them as collateral to lenders. Lenders in turn are at fault for giving so much of money to Karvy when the balance sheet of the stock broking arm did not have the wherewithal to support the loans being asked for.

Allowing the perpetrator of fraud to go scot free is indeed shocking and not expected of SEBI. The least that should have been done is to arrest the person concerned who ordered the fraudulent stealing of shares.

In light of this massive fraud now asking investors to pay upfront margins for sales is like adding insult to injury. One hopes that the SEBI Chairman Ajay Tyagi looks into this issue with a humane touch and understands the emotions and problems of small investors.

The primary issue from Prince Pipes and Fittings Limited was subscribed 2.21 times overall with QIB portion subscribed 3.54 times, HNI portion 1.21 times and Retail 1.89 times. There were 1.61 lac applications.

Primary market activity has begun in right earnest and we have had two successful listings in December and this issue from Prince Pipes. Another half dozen IPOs may be expected in the next 45 days. One only hopes and prays that the rising indices do not change the greed factor of merchant bankers and promoters in changing their expectation of valuations.

The week ahead has a trading holiday on Wednesday on account of Christmas followed by expiry of December futures on Thursday the 26th of December. NIFTY at current level of 12,271.80 points is higher by 120.65 points or 0.99 per cent. While the previous week was good for bulls, there could be some consolidation in the coming week. Irrespective of some correction, I believe the end of expiry would see the bulls having an upper hand.

In conclusion, Reliance could see profit taking on adverse Delhi court ruling and a correction in the stock would be good considering the run up in the stock prices in recent times. While markets have had a good run-up, a day or two of correction would make them healthier. Use corrections to take fresh positions in the market.

(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. The views expressed are personal)

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