Liquidation more likely on F&O expiry day

The track record of exit polls is quite varied and this time would be no different. It’s time to be cautious and if one can refrain from taking undue risks for 3 trading sessions, it would be a great strategy

The May 23-29 period under review saw markets begin the period with a super performance. What was till the previous week, supposed to be a holiday on Thursday (May 23) on account of Buddha Purnima was cancelled at the last moment. The exchanges were worried about the momentum breaking with holidays on Monday (May 20) on account of voting in Mumbai and the Thursday holiday. In any case what one saw was markets taking off on Thursday. Thursday was the key pivot for the markets as they gained a massive 1,197 points on BSE Sensex and 370 points on Nifty. In the process, they made new lifetime highs as well. RBI declaring a dividend of Rs2.1 lakh crores for the financial year ended March 2024 was a great help as well, as it ensured that the fiscal deficit which the government is targeting is well under control.

The period under review barring Thursday was under pressure with markets remaining flat on Friday and losing on the remaining three days. At the end of the period under review, helped by the opening burst on Thursday, BSE Sensex gained 281.84 points or 0.38 per cent to close at 74,502.90 points, while Nifty gained 106.90 points or 0.47 per cent to close at 22,704.70 points. It’s important to note that on Monday and Tuesday markets opened positive and closed negative.

Dow Jones had a tough period and lost on two of the four sessions. It was flat on one and managed gains on just one session. Dow Jones lost 1,020.72 points or 2.56 per cent to close at 38,852.86 points.

There was one issue which opened and closed for subscription during the period under review. The issue from Awfis Space Solutions Limited opened on Wednesday (May 22) and closed on Monday (May 27). The issue was subscribed an overall 108.17 times. The QIB portion was subscribed 116.95 times, HNI portion 129.27 times and Retail portion was subscribed 53.23 times. The issue received 20.83 lakh applications. The issue would list on Thursday (May 30) which is expiry day.

The week gone by saw one new mainboard listing. Shares of Go Digit General Insurance Ltd which were issued at Rs272 listed on Thursday (May 23). The opening price was Rs281.10 on BSE. Shares closed day one at Rs305.75, a gain of Rs33.75 or 12.40 per cent. By Wednesday, the share lost some ground and closed at Rs301.05, a reduced gain since listing of Rs29.05 or 10.68 per cent.

The May 30-June 5 period ahead will be eventful and volatile. The period begins with May futures expiring on the very first day. At the current level, with just one day to go, the May series is up 134 points. This is a normal move on most days, and one is used to seeing such moves on a daily basis. The series is wide open and could go in either direction. Considering that the rollover could be lower this month because of election results to be announced two days later, there could be liquidation by bulls and bears tomorrow making the series more volatile.

Saturday evening, post the final phase of voting, exit polls would begin and cause market movements on Monday. The track record of exit polls is quite varied and this time would be no different. Monday would be the day when markets could move wildly with no results and only exit polls-based movement. By Tuesday afternoon, it would be all over and there would be a new government in place.

It’s time to be cautious and if one can refrain from taking undue risks for three trading sessions it would be a great strategy. In all other cases, refrain from any large overnight exposure on Thursday, Friday and Monday. Make positions post results on Tuesday when clarity exists about markets. Trade cautiously and may the best party win.

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