Is CY 2015 beginning of a new era?

Published on Wednesday, December 31, 2014 by Dilip Davda | Modified on Friday, November 1, 2019

Well, the calendar year (CY) 2014 turned out to be a memorable one for the Indian stock market in particular and the politics in general as we witnessed thumping majority for BJP in Loksabha elections 2014 that propelled the stock markets mania thereafter.

With the change of guard at the centre, market men turned highly optimistic for India growth story and FIIs turned aggressive buyers that kept the market in the bullish mode for the latter half of the year and they pumped in around Rs 97k crore in Indian stock markets for the concluded year. Inflation cooled down drastically by the year-end paving way for rate cut from RBI that remained a far cry as it appeared as Raghuram Rajan still prefers to wait for coming monsoon, inflation scenario in the regime of firm Dollar and sliding crude oil prices. Unfortunately, unseasonal rain in the last two months of the CY 2014 might be the cause of concern as many standing crops spoiled due to this and may have cascading impact on the inflation in the near to medium term. However, seasoned observers do not foresee much change in FII flows for the year 2015 versus what we have witnessed in 2014. While December of 2014 could see the lowest net inflows from FIIs, November 2014 was the third highest.

On the global scene, Euro Zone crisis has raised its head once again and is having its impact on the world markets for a while. Sliding Crude Oil prices appears to be blessing and disguise for Indian economy, weak rupee is keeping a tab of concern and at this juncture, rate cut might boomerang in the form of plight of forex from India as high rate is keeping inflow intact for a while, as opined by RBI Guv.

Prime Minister Narendra Modi's 'Make in India' and 'Swachcha Abhiyan' is likely to bring back the desired growth of economy as well as issue of Black Money as opined by market pundits. New Government's first full-fledged budget is now eyed by the India Inc that is expecting more reliefs in the form of liberal and level playing field for them in industry and monetary policy.

CY 2014 turned out to be a glorious year for secondary market in particular as it witnessed gain of 6329 points for BSE Sensex and 1979 points for NSE Nifty for the year (giving return of 29.9% and 31.4% respectively). Thanks to higher inflow from FIIs. The sectors that ruled the rally can be seen from the table below.

While main benchmarks gave around 30 per cent rewards, sector that crossed this level included Pharma/Healthcare, Bank, Auto, Media, Capital Goods, Consumer Durables. Mid and Small-cap outperformed all the indices.

Thus for 2015, investors can look forward to the stocks of rate-sensitive sectors as well as pharma, Finance and FMCG sector. Besides these, infra sector stocks also should be kept in mind as speedy reforms will boost infra that covers road, transport using cement, power, steel and engineering services. As far as FII inflows are concerned, it will largely depend on US Federal Bank's rate hike move coupled with RBI's rate cut move and thus it will have major impact on the general trends.

While the secondary market remained buoyant it failed to bring in good days for the primary market. During CY14 we witnessed spat of SME IPOs, but on mainboard, just 5 IPOs came that expressed sluggish mood of primary market operators and investors. In particular last two mainframe IPOs of Shemaroo and Monte Carlo did the damage and as it this was not enough, sudden entry of NCML Industry IPO for Rs 60-72 crore fund mobilization getting below 1% response till the end of third day of subscription which is indicating cautious approach of investors as merchant bankers and promoters are still having greedy pricing for their IPOs. Primary market's expectations of FPOs from PSU remain a dream as Government differed the issues for next CY and will try to launch the same before fiscal end. In the debt market to we witnessed lower fund mobilization of around Rs 57k crore as Infra Bonds and Tax-Free bonds were missing from the markets.

According to knowledgeable circles, around 20 mainline IPOs are in the pipeline that includes Infybeam, Lavasa, Lodha Developers, UFO Moviez, Inox Wind, Videocon D2H, SMC Global, Ortel Communications, ACB (India), Manpasan Beverages, VRL Logistics, RINL and few FPOs like ONGC, Oil India, Coal India, RCF etc.

For CY 2015 all eyes are for a while will be on Q3 number season, expectations of budget and then fiscal end NAV building exercise which will keep investors and operators busy in their plans. India Inc. is now waiting for budget clues that will have major bearings and a surprise move from RBI on rate cut as a daring decision. For CY15 there are many 'ifs' and 'buts' and hence, a cautious approach will be the order of the day. However, long term growth story remains intact and hence investors looking for long term investment should encash every big fall for their investment plans.

Well let us hope that CY15 will lead the beginning of long term bullish trend era and will see through the levels of 33000 for BSE Sensex and 9250 for NSE Nifty.

Wishing all our readers 'A HAPPY AND PROSPEROUS NEW YEAR 2015 THAT WILL HELP BUILDING THEIR WEALTH AND HEALTH'.