All eyes on Q1 results

The domestic markets continued their upward movement and made new intraday highs on Tuesday. However, on a closing basis there seems to be resistance coming in at higher levels and also some sort of selling pressure as well. Markets are trying to go up, but there is an equally large number of people willing to book profits at new uncharted levels. Very clearly the tussle between the bulls and bears is intensifying and becoming very interesting. In the July 6-13 period under review, BSE Sensex gained on three of the five trading sessions and lost on one. Wednesday was a see-saw battle with markets opening strong and then moving in both directions. It finally closed negative. BSE Sensex lost 52.14 points or 0.08 per cent for the period to close at 65,393.90 points, while Nifty lost 14.20 points or 0.07 per cent to close at 19,384.30 points.

Dow Jones lost on the first three days of the period under review and gained on the next two days. It lost 152.57 points or 0.44 per cent to close at 34,261.42 points The next FED meeting would be held on July 25-26 and though its sometime away, markets in the US would start factoring in expectations from the meeting. This would make markets volatile.

In primary market news, the issue from Utkarsh Small Finance Bank Limited has opened for subscription today. It will close on Friday (July 14). The issue consists of a fresh issue of Rs500 crore in a price band of Rs23-25. The issue is attractively priced and offers substantial scope for appreciation on listing itself. At the time of writing this article, the issue is subscribed 3.07 times with HNI portion subscribed 3.88 times and Retail portion subscribed 11.33 times. There are 2.72 lakh application forms.

The two listings in the period under review have been blockbusters. The first was IdeaForge Ltd, which had issued shares at Rs672. The share closed at Rs1,295.50 on day one, a gain of Rs633.50 or 94.27 per cent. By the end of Wednesday, there was some profit taking and the share closed at Rs1,280.65, trimming the gains by Rs15.

The second share to list was Cyient DLM Ltd, which had issued shares at Rs265. The share debuted on Monday at Rs420.75, a gain of Rs155.75 or 58.77 per cent. The share gained further in the remaining two days and closed at Rs518.95, gaining Rs253.75 or 95.75 per cent. Impressive by all standards.

Shares of Senco Gold Ltd would list on Friday (July 14). Looking at the past performance over the week and subscription levels for Senco, expect this issue to be another blockbuster one. The issue price was Rs317.

The period July 13-19 ahead would see the results season kicking in and markets would be focused on the same. Markets would react to results as they come and importantly the fact that we are significantly higher than a year ago prices, results for the quarter are expected to be higher and better. In case a company or sector does not deliver on growth in topline and bottom line compared to the year ago quarter there would be substantial erosion in that share or sector.

HDFC Ltd has been merged with HDFC Bank and trading for HDFC Ltd would stop from Thursday (July 13). Post the combined entity, one should give the new HDFC Bank which would be the merged entity to announce its results over the next couple of quarters by when the synergy benefits start kicking in. Incidentally shares of HDFC Ltd and HDFC Bank were under pressure before the trading of DFC Ltd ended on the bourses one final time.

Similarly, Reliance Industries (RIL) has announced the record date as July 20 for the purpose of determining shareholders who would get the benefit of the demerged Jio Financial Services Ltd. The ratio is one for one and there would be a behemoth financial services created on day one of its new avatar. This company would give effective value unlocking for Reliance shareholders. Expect the Reliance share to keep markets enthused for the next five trading sessions till the entity is demerged.

The strategy for the week would be to remain in the large-cap space and stay away from the mid-cap and Small-cap space. They have run their course and are significantly higher than the large-cap performance. A point to be noted is that there are a couple of mutual fund AMCs that have stopped taking subscriptions in Small-cap and mid-cap schemes. This indicates the kind of runup seen.

The immediate resistance is around the current levels and one needs to tread the up move very carefully. On the down side solid supports exist at previous tops of 18,900 on Nifty and 63,600 on BSE Sensex. These would be tough levels to break in the period ahead. Trade cautiously.

(The author is the founder of Kejriwal Research and Investment Services, an advisory firm)