FIIs bullish, buzz points to stability ahead

By Arun Kejriwal

Markets were on a roll in the last week and gained on all five days even though Thursday's gains could be termed as flat. BSE SENSEX gained 1,352.89 points or 3.69% to close at 38,024.32 points. NIFTY gained 391.45 points or 3.55% to close at 11,426.85 points. BSE MIDCAP was up 2.48% while BSESMALLCAP was up 2.12%. These two that led the rally three weeks ago have slowed down, but have certainly not lost the momentum. There have been changes in the groups and under the 'ASM advanced surveillance mechanism, margins on big gainers has increased manifold reducing the activity in those counters.

 

What is indeed heartening from the market's performance is the fact that FIIs have become bullish and are buying in large quantities. On Friday, for example, bulk data showed that the Vanguard Fund invested over Rs 1,250 crs on a single day. Incidentally FII's bought almost Rs 4,300 cr on that day.

Confidence in the market place has returned and the buzz on the street is that there would be stability when the Lok Sabha election results are declared on May 23. With this feeling sinking in, the worst fears of a cobbled working majority are receding. It may also be noted that the benchmark indices are less than 3% away from their all-time highs. Bank Nifty is at a new all-time high with the private banks and PSU banks all chipping in.

The first REIT (real estate investment trust) is being launched with Embassy Office Parks looking to raise Rs 4,750 crore in a price band of Rs 299-300. The anchor book was allocated on Friday and the owner/promoter of Avenue Super Marts, the company which operates D-mart, took a 9% stake. The instrument would have returns in the form of interest and dividend with the interest component being taxable and dividend exempt.

The two earlier avatars of Invits have not done well probably due to lack of knowledge. While the product looks interesting with expected returns being in the 8.25% -8.5% range, the icing on the cake could be capital gains. On the flip side, concern could be the interest pay-out which is taxable. The issue opens on March 18 and closes on Wednesday. The price band is Rs 299-300.

There is another view that investors can make money on the momentum in the market and then invest in such a "fixed income" instrument after two months when markets may have peaked out.

Coming to the week ahead, we have a trading holiday on Thursday for Holi. The possibility of a correction kicking in on Wednesday is quite likely if it has not already happened on Tuesday. Momentum is intact and the markets witnessing healthy volumes with the breadth of the market having improved significantly. There were no sectoral losers last week and the one to gain the least was BSEFMCG up 0.09%.
Market momentum would continue and there could be a couple of days of correction. In any case the bullish mood is intact and FII buying is not going away anywhere.

Continue to ride the momentum and occasionally book profits where one is making good money.

(The writer is founder, Kejriwal Research and Investment Services)