Keep focus on small, midcaps this week

Market in the period under review June 15-21made a new closing lifetime high on Friday. BSE Sensex also made a new lifetime intraday high at 63,588.31 points beating the previous high of 1st December at 63,583.07 points. NSE Nifty however failed to do it and Wednesday’s intraday high at 18,875.90 points against 1st December 2022 high of 18,887.60 points fell short by a mere 12 points. This case of so near and yet so far is probably indicating that markets need time to cross the all-time high and have yet another free run from these levels. This would result in time being spent at these elevated levels before a fresh rally happens. For the period under review, markets gained on two of the five sessions and lost on two. The last day Wednesday, markets saw strong open but a strong rally towards the end was just not enough to cross the highs. Markets ended with decent gains. For the period, BSESensex gained 294.64 points or 0.47 per cent to close at 63,523.15 points, while Nifty gained 100.95 points or 0.54 per cent to close at 18,856.85 points.

Dow Jones lost on three of the four trading sessions and gained on just one. Dow was down 158.38 points or 0.46 per cent to close at 34,053.87 points.

The Rs480 crore IPO from HMA Agro Processors Limited has opened for subscription from Tuesday, June20. At the time of writing this article on day two of the issue which closes on Friday, June23, the issue was subscribed 0.55 times overall,while Retail portion subscribed 0.37 times. There were over 23,000 forms in all.

IdeaForge Technology Limited is tapping the capital markets with its fresh issue of Rs240 crore and an offer for sale of 48,69,712 equity shares in a price band of Rs638-672. The issue opens on Monday, June 26 and closes on Thursday, June29. The company is into the design, development, engineering and manufacturing of Unmanned Aerial Vehicles or ‘UAVs’, popularly known as drones. In primary market news, shares of Ikio Lighting Limited listed on the bourses on Friday, June16. The company had tapped the capital markets with its fresh issue for Rs350 crore and an offer for sale of 90 lakh shares in a price band of Rs270-285. Shares listed at Rs391 on BSE and Rs392.50 on NSE. They closed day one at Rs403.75, a gain of Rs118.75 or 41.67 per cent on BSE and at Rs403.85, a gain of Rs118.85 or 41.70 per cent on NSE. On Wednesday, shares closed at Rs437.10 on BSE and at Rs437.20 on NSE, adding to its listing day gains substantially.

Action in the market place has shifted to small-cap and mid-cap space. This is an area where institutional action or participation is fairly low with FPIs restricted to the really large midcap and domestic institutions in a few large stocks from the mid-cap space and small-cap stocks. Bulk of the action is generated by retail investors. This is also the most vulnerable section or segment as there are frequent cases of pump and dump which happen when markets are at heightened levels. It’s therefore very important that stocks invested in have fundamentals and are not bought on the basis of widely circulated tips. Remember that there is no free lunch.

The strategy for the week ahead would be to play in the mid-cap and small-cap space and watch out for any signs of reversal. Even corrections at such stages in the market are swift. There would also be a retest of market highs once there is a reversal at the top. In short, elevated levels and unchartered territory is the reason for wild movement. The week ahead June 22-28would end one day prior to June series expiring on Thursday,June 29. This being a five-week series,it would be volatile session when it comes to an end. Trade super cautiously.

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