Mumbai: During each of the week’s four trading sessions, the benchmark index markets reached fresh intraday highs. The first three trading sessions saw closing highs, and the final trading session on Friday saw a wild outburst. It’s crucial to allow events to unfold and make strategic decisions.
What was witnessed (was) most likely the first setback following June 4th. Momentum was lost, and the back was broken. Everyone is wondering what comes next.
BSE SENSEX gained 85.31 points or 0.11 per cent to close at 80,609.65 points. NIFTY gained 28.75 points or 0.12 per cent to close at 24,530.90 points.
The broader markets saw BSE100, BSE200, and BSE500 lose 0.55 percent, 0.81 percent, and 1.06 percent, respectively.
BSEMIDCAP was down 2.63 per cent, while BSESMALLCAP lost 2.86 per cent. Suffice it to say that the colour of the markets was red on the trading screens. The IT and Tech sectors saved the market somewhat as they were big gainers, while Capital goods and metals were the big losers.
The intraday high on Friday was 81,587.76 points on BSESENSEX and 24,854.80 points on NIFTY. The markets suffered losses from their intraday highs on Friday, with losses of almost 1,000 points on BSESENSEX and 325 points on NIFTY.
This kind of fall on virtually the eve of the budget sets up an interesting week with the budget on Tuesday and July futures expiry on Thursday.
The markets would see a substantial increase in volatility and a lot of one-sided trading. Three out of the four trading sessions saw market gains, and one saw a loss.
The Indian Rupee lost 12 paise or 0.14 percent to close at Rs 83.66 to the US Dollar. Dow Jones, too, had a very choppy and volatile week. It gained sharply in the early part of the week and then fell equally sharply.
In a week that saw the Dow gain in three of the five sessions, it made an intraweek high of 41,221.98 points. The Dow closed at 40,287.53 points, a gain of 286.65 points or 0.72 percent. The reversal was also very sharp and hit the markets badly.
What caused the global and local market setbacks?
People can point the finger to the significant outage that occurred with Microsoft Edge, but it was irrelevant. Numerous flights were forced to cancel on Friday and partially on Saturday due to pandemonium that also occurred in India. After that, things got back to normal. It simply serves to highlight how exposed the world has become.
Results season is on, and the outcome is a mixed bag. Following the announcement of the TCS results, the Infosys results were slightly better than anticipated by the public. However, Infosys’s share price increased significantly due to unfavourable market perceptions. It closed at Rs 1,791 after gaining Rs 81, or 4.73 percent. It peaked at Rs 1,842, down Rs 51 from the peaks. Reliance Industries and four banks released their findings over the weekend. These outcomes don’t excite the markets in the current environment, and they can’t lift sentiment and propel markets higher.
Further, there would be some mention of allocation to build the new capital of Andhra Pradesh after Hyderabad became the capital of Telangana. An allocation of special status for Bihar would further dent the resources available.
While the buoyancy of revenue collection and the economy, which is in fine fettle, would increase allocable money for the FM, it would be a tightrope walk to balance the expectations of all stakeholders. Allocation to growth-driven infrastructure could probably see some hit. All of this could see the budget being a mixed bag from the market’s perspective.
One possible view that emerges post-budget is that there is no negative surprise, and hence, it is positive and could rally the markets. Otherwise, by and large, it could be a neutral budget from the market perspective. In any case, the biggest concern in the markets currently is valuations, and they are skewed and tend to be in the expensive and uncomfortable zone.
Post the budget presentation, July futures expire on Thursday, July 25th. The present level of NIFTY at 24,530.90 points is higher by 486.50 points or 2.02 percent. While the lead currently favours the Bulls, Friday’s intraday fall of close to 325 points means the lead is not much. Further, the Budget in the middle could see sharp volatility. While currently, the bulls have the upper hand, things could change entirely over the next four days.
In primary market news, there is an issue from Sanstar Limited during the week. The issue opened on Friday, 19th of July and would close on Tuesday, 23rd of July. The issue consists of a fresh issue of 4.18 crore shares and an offer for sale of 1.19 crore shares in a price band of Rs 90-95.
The company is in the business of processing maize for use in food, pharma and cattle feed. The PE multiple for the company is between 18.95 and 20.00. The main object of the issue is to increase the present capacity by almost double. This capacity would be available by the end of the current financial year. With present capacity utilisation at a high 80 per cent level, there is little scope for growth in the current year. With dilution, there would be an impact on earnings.
While the shares currently have a grey market, they will change as the issue progresses and lists. Investors with a long-term view could look at the share once it is listed and then take a call.
The markets in the week ahead are expected to be choppy and volatile, with two events ahead. The budget and July futures expiry will keep them in the thick of action. The strategy would be to continue taking money off the table and allowing the budget to sink in over the next few days.
FPIs have given confusing signals with their buying and selling alternating overtime over the last month or six weeks. Geo-political news in the previous 24 hours is also a cause of worry. In such a fluid position ahead of important events, it becomes more imperative to have a light position and allow events to unfold.
In conclusion, in the face of market volatility, it’s crucial to observe and then act. Trade with caution.
–IANS
