Time for consolidation post fireworks

By Arun Kejriwal

Calendar year 2020 has come to an end and it was a spectacular one for the markets, not withstanding Covid-19. The benchmark indices returned gains of 15.75 per cent on BSESENSEX and 15.75 per cent on NIFTY. Bank NIFTY returned negative returns of 2.79 per cent.

The week ended 1st January 2021 saw BSESENSEX gain 895.45 points or 1.91 per cent to close at 47,868.99 points while NIFTY gained 269.25 points or 1.96 per cent to close at 14,018.50 points. BSE100, BSE200 and BSE500 gained 2.01 per cent, 2.09 per cent and 2.21 per cent respectively. BSEMIDCAP was up 2.76 per cent while BSESMALLCAP was up 3.31 per cent. Since around Diwali time in just over six weeks the BSESENSEX has added 4,500 points while NIFTY has added 1,300 points.

The Indian Rupee gained 42 paisa or 0.57 per cent to close at Rs 73.12 to the US Dollar. Dow Jones closed at a new high for the year at 30,606.48 points. The gain was 406.61 points or 1.35 per cent. The high of the year was 30,637.47 points intraday made on the last trading day of the year. The gains clocked by Dow jones for calendar year 2020 were 7.25 per cent.

NIFTY futures for December series expired on a positive note gaining 994.75 points or 7.66 per cent. Expiry day itself was one of the quietest days witnessed with intraday movement of just 88 points and net gains of -0.20 points. NIFTY has registered gains in the last six series out of seven. The only month in which it was negative was in September 2020.

The issue from Antony Waste Handling Cell Limited listed on the bourses on the opening day of the new calendar year. The discovered price was Rs 430 on BSE and Rs 436.10 on NSE. The scrip touched a high of Rs 492.75 on BSE, before profit taking saw the scrip dip below the opening price and close at Rs 407.25, a gain of Rs 92.25 or 29.29 per cent.

SEBI has passed an order in the 2007 insider trading case of RPL against Reliance Industries, its Chairman and a couple of other entities and cumulatively fined them Rs 70 crs. The Reliance group had filed for consent terms thrice and offered to pay Rs 2 crs and finally Rs 10 crs in 2013 when the 3rd offer was rejected. In 2017, SEBI had asked the company and concerned entities to disgorge an amount of Rs 447 crs which was challenged by the company in SAT. This appeal was overturned in November 2020. This is an order post this appeal being dismissed.

Reliance is India's largest manufacturing company and has raised a huge amount of money in the recent two quarters for its telecom business from various overseas investors. Readers would also recall that during the thick of covid-19, the regulator SEBI had taken a very pragmatic view and assisted Reliance in fundraising through the largest ever rights issue. Its time Reliance accepts that the regulator is the final authority and needs to regulate companies and settle this case once and for all. One should remember that until this is settled this would always remain as a contingent matter on the books of Reliance Industries and come in the way when corporate governance is discussed. The announcement of the order could have a knee jerk impact on stock prices when trading resumes on Monday the 4th of January.

FII's continued their aggressive buying and invested Rs 48,223.94 crs in December on a net basis while Domestic institutions sold Rs 37,293 crs. Since the beginning of financial year 2020-21, FII's have bought in every single month except September when they were net sellers.

On the covid-19 front, the world saw 8,49,88,303 patients, 18,43,733 deaths and 6,01,06,382 patients recovering. In India we saw 1,03,24,631 patients, 1,49,471 deaths and 99,27,310 patients recovering. Compared to the previous week, the world saw 42,68,014 new patients, 79,035 deaths and 31,88,973 patients recovering. In India we saw 1,36,239 new patients, 1,812 deaths and 1,65,772 patients recovering. Vaccination of patients in the world has started and is likely to happen in India as well from next week. The protocols have been issued and various states are gearing up to administer the vaccine in a phased manner.

Markets have had a phenomenal run and many milestones have been achieved in the runup. One more remains with BSESENSEX waiting to touch 48,000 level. Once that is achieved and post the fireworks from Diwali to Christmas and New Year, it would be time for consolidation and digesting gains of this run-up. While this does not suggest that markets would correct sharply, it does imply that the direction of markets is likely to turn sideways and become less volatile. Investors would wait global cues, fresh allocation of funds, the swearing in of Joe Biden and how the Democrat administration views global challenges. All of this would take a couple of weeks before clarity emerges.

In such times it would be appropriate to encash huge gains made in the market and await buying opportunities.

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

Source: IANS