Choppy and volatile trading may continue
Markets globally seem to be stuck in a trading zone and are waiting for a major news flow to give a direction to them in the medium term; With no discernible trend visible, market prediction is becoming that much more difficult
image for illustrative purpose
The period February 9-15 under review from continued to remain volatile with markets moving up and down on alternate days. There is no trend in the markets and they seem to be moving within a broad band of roughly 500 points on Nifty and 1,500 points on BSE Sensex. With no discernible trend visible, market prediction is becoming that much more difficult. BSE Sensex gained 611.30 points or 1.01 per cent to close at 61,275.09 points, while Nifty gained 144.15 points or 0.81 per cent to close at 18,015.85 points. Markets gained on three of the five trading sessions and lost on the remaining two. Wednesday was extremely volatile with markets moving in both directions and finally closing with gains.
Dow Jones lost a tad at 67.42 points or 0.20 per cent to close at 34,089.27 points. Dow lost on three of the five trading sessions and gained on two. Markets globally seem to be stuck in a trading zone and are waiting for a major news flow to give a direction to them in the medium term. Till something does materialise, we seem to be stuck in moving in between no man’s land, just two steps forward and one backwards in one week followed by two steps backward and one forward in the following week.
The Ukraine Russia war is almost a year old and there seem to be no signs of it coming to an end. It’s now a part of our daily lives and there seem to be no serious efforts to diffuse the situation. With such a scenario, people have stopped discussing the same and it’s no longer a part of economic and global discussions particularly when stock markets are discussed.
It seems new age and e-commerce companies have a set of rules of their own. After the tweet last week from Deepinder Goyal of Zomato to Vijay Shekhar of Paytm on profitability and performance, it’s now the turn of Falguni Nayar the MD and CEO of the company that owns Nykaa. Commenting on the performance of the company after its Q3 and nine months results, she said “the performance has been especially good given the backdrop of eight fewer festive days in Q3 FY23 compared to Q3FY22.”
This was in response to the company posting revenues of Rs1,462 crs which were up 33 per cent. What was conveniently not mentioned was the fact that gross margins, EBITDA and Net margins fell for the company. The company reported a net profit of Rs8.5 crore, which was down 71 per cent from the earlier Rs29 crore. One wonders whether sales growth is all that a company looks for and doesn’t care about its margins.
Shares of Nykaa have been at the receiving end ever since the company announced a liberal bonus issue of five shares for every share held. The company had issued shares at Rs1,125 and made a high within a month of listing of Rs2,560. From there it has been a one-way street and after being adjusted for bonus, where the high would become Rs426.66 and the issue price Rs187.50, is now trading at Rs143. The share has lost 24 per cent against its issue price and 67 per cent from its high. I believe all of us need to go back to school to learn what these modern PE-funded promoters and management mean when they make comments.
Coming to the period 16-23, we would end the period with February Futures expiring on the very next day. That would make markets very volatile on the last day of the period under review. At the current level, the February series is higher by roughly 123 points or 0.68 per cent. The lead is insignificant and the series could go in either direction. Expect markets to remain choppy and volatile and continue to search for direction. Crucial levels for the markets are 61,500 on BSE Sensex and 18,265 on Nifty. Wednesday’s movement in the markets was led by Reliance which added 2/3rd of the gains for the day in BSE Sensex. On the lower side, strong support exists at 17,500-17,600 and then at 17,000-17,200 on Nifty. This would correspond to 59,800 and then at 57,250-57,850 on BSE Sensex.
The strategy would be to sell into rallies and buy on sharp dips as markets do not have any trend as of now. Results season is also over and news would be eluding all of us. Play the market movements.
(The author is the founder of
Kejriwal Research and Investment Services, an advisory firm)
