BSE SENSEX lost 491.90 points or 0.84% to close at 58,152.92 points while NIFTY lost 141.55 points or 0.81% to close at 17,374.75 points
Over the past week, markets have made gains, but have sold out to end in negative territory. They won on three days and lost on two. In what makes for interesting reading, they lost the first day of the week and the last day of the week.
BSE SENSEX lost 491.90 points or 0.84% to close at 58,152.92 points while NIFTY lost 141.55 points or 0.81% to close at 17,374.75 points. The broader markets saw BSE100, BSE200 and BSE500 lose 0.95%, 1.00% and 1.27% respectively. BSE MIDCAP fell 2.02% and BSE SMALLCAP lost 3.40%.
The Indian rupee lost 68 paise or 0.91% to close at Rs 75.38 against the US dollar. Dow Jones lost 351.68 points or 1.00% to close at 34,738.06 points. There is huge concern about rising inflation and the subsequent rate hike. This led the Dow Jones to drop 500 points on Thursday and Friday. Dow Futures at the time of writing is also not indicating a promising start. The Nasdaq’s fall was more pronounced than that of the Dow Jones and this could be a worrying factor for the IT sector in India, which has seen a huge rally over the past few months.
In primary market news, shares of Adani Wilmar Limited went public on Tuesday in dramatic style. The company had tapped the capital markets with its new issue to raise Rs 3,600 crs in a price range of Rs 218-230. The shares were allotted at Rs 230 and the uncovered price was Rs 221 on BSE and Rs 227 on NSE. They rose from these levels and closed at the upper circuit on the ESB at Rs 265.20. The week saw the share hit high runs on Wednesday and Thursday and remain wild on Friday where it moved back and forth to touch Rs 419.90 and Rs 351.10. The stock closed the day at Rs 381, a loss of Rs 0.80 from the previous day’s close. For the week, the share gained Rs 151 or 65.65%. The company would report its quarterly results on Monday and would be closely watched as the stock’s PE has moved significantly from around 35x at the time of the IPO to over 60x given the rise in price and growth. dilution. Expect a volatile day for the stock on Monday.
It’s been six weeks since the 2022 calendar year began, and so far we’ve only seen three main shows hit the market. While two have been listed, the third from Vedant Fashions Limited would be listed in the coming week. The filing of the LIC DRHP appears to have been delayed and, contrary to the initial expectation of February 10, is expected to occur late tonight or early tomorrow morning. The key events to watch for would be the extent of dilution and the size. The market vine is talking about 5% to 10% with the issue size being around Rs 75,000 crore to 1.25 lakh crore. However, what is known is that the intrinsic value is around 5.3 lakh crore and the expected issue price would be between 2 and 3 times this intrinsic value.
RBI in its monetary policy has kept key rates unchanged, but it looks like the next meeting in April would see an increase in lending rates signaling the end of stable rates unchanged. By the time RBI holds its meeting, even the US Fed would have raised interest rates, while the Bank of England has already done so.
Markets moved in a wide band with a range trending lower indicating an early signal that things could get really bearish in the months ahead. The range on BSESENSEX which was 59,600 on the upper side or resistance has now gone down to 59,000 while on the support side it has moved from 57,050 to 56,400. Similarly on NIFTY these levels are at 17 800-17,650 and on the support side 17,000-16,800. These levels are indeed important and a violation in either direction would indicate that the trend is changing. If the upside is breached, we could see a fast and fast rally, while if the downside is breached, we could see new lows. and a rapid downward movement. Intuition says we are more downside than upside.
Factors affecting the markets include global markets, particularly the behavior of Dow Jones, whether FIIs continue to remain short, and technical indicators or charts and their movement. Finally, the earnings season for the quarter ended October-December 2021 is almost over. The results have been partly good and not enough to change the whole sentiment about earnings. An interesting point is how the markets behaved on Friday, where they opened with a downward spread and then traded in a narrow band. However, FII was neutral that day and its gross revenue was Rs 19,000 crore, which is a substantial number compared to normal. It is another matter that they bought shares worth Rs 108 crore.
Coming to the markets in the coming week, expect them to remain volatile and under pressure. Every rally should be used as a sell opportunity and investors should create a war chest and keep cash on hand to buy when the opportunity arises. Although there are dips, only really large dips and dips should be chosen. Trade cautiously and be greedy when using your money to buy stocks.
(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. Opinions expressed are personal)
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