A New Top In The New Year

Looks like Samvat 2070 is all set to be a year of records for the market. The benchmark indices closed at their highest levels (on a closing basis) for the first time on Wednesday, October 30, and are looking poised to scale their highest levels any time soon. Is the rise sustainable? Only time will tell (In fact, our cover story this time looks to decipher the direction of the market for you).

All said and done, the fact remains that if you have stayed out of the market fearing volatility, you have missed the bus for now. On the contrary, if you had invested in the two months of July and August and had the courage to stay invested through September and October, you would certainly have made some handsome profits. Look at the performance of the market over this period, and it becomes clear why staying invested sometimes pays off well.

Meanwhile, the market shot up during the last fortnight, with the BSE Sensex opening at 20579 points on October 17 and gaining momentum in the succeeding sessions. It gained a good 349 points till October 29. But the decisive move came on the last day of the fortnight (October 30), when it closed at its highest level (closing basis). The Sensex gained 104 points to close at 21033 points at the end of the day. On the same lines, the NSE Nifty also opened at 6098 points on October 17 and gathered a good amount of momentum to close at 6220 points, gaining 122 points by October 29. It gained a good 30 points on October 30 to close at 6251 that day.

The most important element of this rise in the indices has been the FII action. They pumped in net Rs 9700 crore till October 29. FIIs haven’t gone negative on equities throughout the fortnight. On the other hand, the Indian mutual funds were feeling somewhat jittery with the pace of markets and booked profits with a net sale of Rs 2305 crore during the last fortnight.

As far as the performances of the global indices are concerned, the US Dow consolidated amid signs of recovery, gaining 1.30 per cent during the last 15 days. On the other hand, UK’s FTSE was the biggest gainer, higher by 2.35 per cent, followed by Germany’s DAX and Singapore’s STI, which rose by 1.83 and 0.37 per cent respectively. China’s Shanghai Composite was the biggest loser, with a 2.73 per cent drop, followed by Hong Kong’s Hang Seng, Japan’s Nikkei and Brazil’s Bovespa, down 2.33, 1.67 and 1.60 per cent respectively.

1310 stocks moved northwards, while 949 were down and 35 remained unchanged. As far as the gainers are concerned, Suzlon appreciated the most with a 45.59 per cent rise, followed by Adani Enterprises, Federal Bank, Gitanjali Gems and Axis Bank, up 27.25, 18.94, 16.40 and 15.70 per cent respectively. On the other hand, Exide Industries was the biggest loser of the fortnight, with a 9.29 per cent decline followed by Madras Cements, Idea Cellular, HCL Technologies and TCS, which declined by 8.67, 7.98, 6.92 and 6.66 per cent respectively.

Considering the current phase of the markets, it seems a wise move to book partial profits as some correction could take place due to selling of bigger institutions. The risk-reward ratio in the current market is also very limited. On the other hand, those who want to enter into the markets should have a sharp eye on the proceedings, as a dip of one or two days can give them a good investment opportunity.