The market continued with its volatile ways and registered decent gains at the end of the week. The BSE Sensex was up 478.83 points, or 1.79 per cent, to close at 27,238.06. The Nifty gained 156.55 points, or 1.90 per cent, to close at 8,400.35.
The present rally could be best described as a pre-budget rally or the one where short covering is the basic trigger. In my opinion, the present rally lacks conviction and there are more people who believe it will not last than those believing it will. This could be a possible trigger as well.
The Dow Jones also seems to be struggling and is unable to cross the 20,000-mark. It is not to suggest that it is weak but seems to be losing momentum. President-elect Donald Trump would be sworn in as the US president later in the week.
The week ahead will see the follow-on fund offer from CPSE-ETF. The size of the offer is Rs 6,000 crore and would have an anchor portion of 30 per cent. The entire balance of Rs 4,200 crore has a first choice for retail investors. If it does not get subscribed it would spill over to pension funds and then to HNIs and QIBs. There is a 5 per cent discount for all applicants who are allotted units. The present units from the fund offering closed for trading at Rs 26.85 on Friday the 13th of January. I believe, the fund offering is good and the skewed nature of its holding in favour of energy and oil would benefit investors, with oil prices having bottomed out and firming up. Secondly, the element of subsidy no longer exists unlike in 2014 when there was a large and uncertain subsidy component, which had to be borne by these companies.
Tata Sons have appointed N Chandrasekaran as the new chairman of Tata Sons on expected lines. He was tipped to succeed ousted chairman Cyrus Mistry after the spat. The present head of TCS has been a Tata professional for over 30 years and has a long career ahead of him as he is currently aged 53. A low key professional with an excellent track record is what Chandra brings with him. He would take over as chairman on February 21.
The results from TCS and Infosys depicted the tough environment through which the sector is currently passing. While both companies are confident about performance going forward, the sector does have some uncertainty and results were cautiously taken. Infosys and TCS both lost ground on Friday post-results, while TCS lost 1.38 per cent for the week, Infosys gained 0.38 per cent on a weekly basis.
The Election Commission has reserved its order on the claims of Mulayam Singh Yadav and his son Akhilesh Yadav in the Samajwadi Party dispute on the election symbol. The likely outcome is a freezing of the symbol for the current election. This would be bad news for both the factions as India still votes for a symbol and this could lead to a loss of votes for both parties.
The market is still trying to find its momentum and a string of drivers is needed. I am unable to see any in the immediate short-term and believe that the budget is the best possibility of some direction being given to the market. Till then we would have to live with the plus two, minus two percent move every week.
(The author is founder, Kejriwal Research & Investment Services)
