Bourses in the grip of the bulls

The period under review from 21st December to 27th December was a pullback period with markets on their way to recovering the ground that was lost on 20th December when a tsunami had hit markets. Readers would recall that on that day, markets had made intraday highs of 71,913.07 on BSESENSEX and 21,593.00 on NIFTY before a massive sell-off ensured a huge fall. This cost the market its momentum from which it is currently recovering.

Having done that, they went on to make new highs, both on an intraday basis and closing basis. The period under review, which was a four-day affair, saw markets gaining on all four trading sessions. BSESENSEX gained 1,532.12 points or 2.17 per cent to close at 72,038.43 points while NIFTY gained 504.60 points or 2.39 per cent to close at 21,654.75 points. The new intraday highs are 72,119.85 points on BSESENSEX and at 21,675.75 points on NIFTY.

While last Wednesday was a day of reckoning because of the sharp rally and then doubly fast fall, this Wednesday is the day of glory where the markets had a spectacular run and outperformed themselves.

Dow Jones was virtually flat with gains on two of the four trading sessions and losses on the remaining two. Dow lost 12.65 points or 0.03 per cent to close at 37,545.33 points.

This was a listing period with as many as seven issues listing. The first to list was Inox India Limited which had issued shares at Rs 660. It closed listing day at Rs 939.90, a gain of Rs 279.90 or 42.40 per cent. It lost substantial ground to close at Rs 896.10, a gain of Rs 236.10 or 35.77 per cent.

There were three issues which listed on Tuesday the 26th of December and three that listed on Wednesday the 27th of December. The first from 26th was Motisons Jewellers Limited which had issued shares at Rs 55. The discovered price was Rs 103.90 on BSE and Rs 109 on NSE. The share closed day one at Rs 101.18, a gain of Rs 46.18 or 83.96 per cent. It lost further ground and closed at lower circuit of Rs 96.13, a gain of Rs 41.13 or 74.78 per cent.

The second share to list was Muthoot Microfin Limited which had issued shares at Rs 291. The discovered price was Rs 278, a below par listing. During the day the share lost further and closed at Rs 266.20, a loss of Rs 24.80 or 8.52. The share closed the period under review with further losses at Rs 264.05. The share is now down Rs 26.95 or 9.26 per cent.

The third share to list was Suraj Estate Developers Limited which had issued shares at Rs 360. The discovered price was Rs 343.80. The share lost further ground during the day and closed at Rs 334.30, a listing day loss of Rs 25.70 or 7.13 per cent. It gained some lost ground on Wednesday to close at Rs 338.60 a loss of Rs 21.40 or 5.94 per cent.

Three shares listed on Wednesday the 27th of December. The first of them was Happy Forgings Limited which had issued shares at Rs 850 per share. The discovered price was Rs 1,001.25, a gain of Rs 151.25 or 17.79 per cent0. The share closed higher at Rs 1,029.80, a gain of Rs 179.80 or 21.15 per cent.

The second share to list was Credo Brands Marketing Limited who had issued shares at Rs 280. The discovered price was Rs 282, a gain of Rs 2 or 0.71 per cent. The share closed at Rs 312.50, a gain of Rs 32.50 or 11.60 per cent.

The third and final share to list was RBZ Jewellers Limited who had issued shares at Rs 100. The share listed at Rs 100, which was a flat listing. By the end of the day, it gained to close at upper circuit at Rs 104.99, a gain of Rs 4.99 or 4.99 per cent.

It is important to understand that grey market premiums give you a broad trend and reflect market mood about the issue and its success. When issues are bunched up there is also a herd mentality and price distortions happen. Secondly the premiums on listing change quite significantly and by and large lose in value. Even in the above seven cases, the premium on listing is far lower than what the grey market indicated and in two of the cases, shares have listed lower than the issue price.

In the period 28th December to 3rd January, one will see December futures expiring on the very first day. The series is currently completely in the favour of bulls and the series is up a massive 1,521.60 points or 7.55 per cent. Over the last four days, there has been a steady recovery of lost ground by the bulls after the sharp Wednesday debacle of 20th December. At worst, the bulls may concede some ground, and allow the bears a satisfaction that they have made some ground after being battered and bruised over the month. We also have the last of the listings to happen with one doing so on Thursday and one on Friday.

Markets is in the grip of the bulls and are scaling new highs. To recommend levels of resistance in new unchartered territory is difficult and hazardous. The simple strategy is to remain in the large cap stocks where there is a greater degree of comfort. Stay invested because the current market momentum may see dips on and off but till the elections come that is in end April beginning May 24, they will continue to dominate the headline news. Trade cautiously.

(The author is the founder of Kejriwal Research and Investment Services,

an advisory firm)