Markets may remain highly volatile, choppy

The April 14-20 period under review was a mere three trading days with holidays on Thursday and Friday. Markets fell very sharply on Monday and Tuesday and the rebound on Wednesday brought about some sort of revival. What one saw on Tuesday in the last sixty minutes of trading was the market plunging. FIIs did sell on both days Monday and Tuesday, but the quantum of sales did not justify the kind of pressure witnessed. It appears there were some trades which got triggered and led to the sharp slide. At the end of the period, BSE Sensex lost 1,301.43 points or 2.28 per cent to close at 57,037.50 points, while NSE Nifty lost 339.10 points or 1.98 per cent to close at 17,136.55 points. Markets have gained over 1,000 points from the low on BSE Sensex and over 300 points on Nifty.

Dow Jones in the four-day week gained 691.31 points or 2.02 per cent to close at 34,911.20 points. Dow lost on two of the four trading sessions. In global news, the war between Russia and Ukraine is over 55 days old and just seems to drag on and on. A couple of cities have fallen in Ukraine and there is no focus on talks or ending the war. It appears that Ukraine after being pushed into the war is left with assurances from all, but no deliverables. It is in an unfortunate position. Crude prices continue to trade above the 100-dollar mark.

The weakness in the market is on account of FII induced sales and that is in the large cap stocks. The situation in the midcap and Smallcap is better as FII's don't own these stocks. How long this situation continues is indeed difficult to predict as one cannot read the mind of institutional investors. The situation in the US markets as regards inflation is indeed worrisome and experts believe the next meeting of the FED could see a more than 25 basis points rise in interest rates.

In the period under review from April 21 to April 27, we would see two IPOs hitting the market. The first is from Campus Active Wear Limited which is tapping the markets with its offer for sale of 4.79 crore shares in a price band of Rs 278-292. The issue would garner Rs 1,394.3 crores at the top end of the price band. The issue opens on Tuesday the April 26 and closes on Thursday of April 28.

The second issue would be from Rainbow Children's Medicare Limited. This issue is likely to open on Wednesday of April 27 and close on Friday of April 29. Details of the size would be available when the company has its road show in the next two days.

Campus would be the first main board issue under the new norms of RBI regarding leverage and SEBI regarding HNI subscription and anchor lock-in. Henceforth any entity can leverage at most Rs1 crore to apply for IPO's. The anchor portion would have half the shares locked in for 30 days and half for 90 days. HNI portion of 15 per cent would be split into two parts where the first of 5 per cent would be for application size of Rs2 lakhs to Rs10 lakhs and the balance 10 per cent for application size of Rs10 lakhs and over. All these measures would put pressure on subscription number for IPO's and effectively reduce the listing gains available to investors. This would be because of the fact that there would be no cost of funding getting built into the price.

Markets post the announcement of HDFC-HDFC Bank merger have been under pressure except the opening day when they gained over 2 per cent Infosys results have disappointed the street and these three heavyweights have rocked the market quite severely. In the period April 21 to April 27, expect markets to remain volatile and choppy. The previous lows made on Tuesday of 56,000 on BSE Sensex and 16,825 on Nifty would act as the last immediate support. Resistance is at 57,650-57,700 on BSE Sensex and at 17,300-17,350 on Nifty. Keep these levels at the back of mind when trading. Continue to sell on rallies and buy on sharp dips.

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