Singing To Rajan

There is probably no other instance when the markets have reacted so positively to the arrival of a new RBI Governor. Measures initiated by Raghuram Rajan have started yielding (instant) results and the markets are already singing his praise. The rupee is slightly shy of the 60 mark to the dollar and this has sent the markets soaring up over the past fortnight. Bulls have come back, in a way marauding the bears and sending them scurrying for their life. So much has been the force that the Sensex once again breached the 20000 point mark.

What makes the fortnight even more eventful is that the FIIs are back in action. Over the last 15 days they have been instrumental in pushing the markets to new heights. However, retail investors are yet to find their way back to the markets.

On the whole the BSE Sensex opened at 18314 points on September 4 and since then consistently gained momentum to reach its peak of 20086 points on September 16, before closing at 19804 points on September 17. It gained an overall 1489 points during the fortnight. The best part of fortnight was that markets were at the lowest level of 18188 on the first day itself i.e. September 4 but haven’t looked back ever since then. Similarly, the Nifty opened at 5358 points on September 4 and touched its lowest level of 5318 points on the same day but then gained momentum to touch its highest level of 5957 points before closing to 5850 points. It gained an overall 491 points during the fortnight.

As for the FIIs, they once again, after many months, showed a kind of rare confidence in the Indian stock market turning out to be net buyers to the tune of Rs 5726 crore crore in equities. On the other hand Indian Mutual funds remained net sellers, offloading equities worth Rs 952 crore during the fortnight. The combined turnover of NSE and BSE stood between Rs 10320 crore and Rs 17347 crore.

Globally too, the signs of recovery were quite visible, as all the indices showed some amount of strength. In the last fortnight the US Dow gained 4.70 per cent due to good macro indicators reflecting an improvement in the economy. The biggest gainer of the fortnight was Brazil’s Bovespa with 5.13 per cent rise followed by Germany’s Dax, Singapore’s STI, Hong Kong’s Hang Seng, South Korea’s Seoul Composite, Japan’s Nikkei and China’s Shanghai Composite with 4.82, 4.63, 3.94, 3.15 and 2.72 per cent rise respectively.

Out of the total, 1485 stocks appreciated while 39 stocks remained unchanged over the fortnight. As far as the individual gainers are concerned, Financial Technologies was the biggest gainer having gone up 45.57 per cent followed by GMR Infra, Axis Bank, EIL and Oriental Bank of Commerce with 37.17, 31.25, 29.83 and 28.92 rise respectively. On the other hand Ranbaxy Laboratories was the biggest loser having declined 25.71 per cent, followed by Muthoot Finance, Biocon, Arbindo Pharma and Tech Mahindra, which declined 11.97, 8.05, 6.36 and 6.21 per cent respectively.

As for the time to come, you could see some profit booking in the next few days. Also rising inflation and US tapering could play a spoilsport on the mood of the markets. It will be important to see how Rajan’s mid quarter monetary policy review acts on the markets mind. For now, be cautious to any knee jerk reactions.