Markets may remain volatile, choppy

Tuesday’s move is confusing and either of two things could happen. We could see markets correcting all over again or making yet another set of new highs. Clarity on this would be available in trading on Thursday and after Wednesday’s Fed meeting

The period from 25th April to 1st May was full of action and was volatile. Markets began with April futures expiring on the very first day of the period under review. After a quiet five hours of trade, markets in the last hour stepped on the pedal and it appeared as if markets are going to take off. Markets gained very sharply and ensured that the bulls took the series. The Nifty April series gained 243.45 points or 1.09 per cent to close at 21,570.35 points.

To put things in perspective, the gains on Thursday, which was expiry day, were at 167 points. The first day of the new series of May, saw Nifty lose 151 points on the very first day. Call it by any name, the bulls won the war and the series on Thursday and lost it on Friday. Monday saw the bulls push the market and did so again on Tuesday. After having crossed the lifetime highs on Nifty made on 10th April, markets just gave way and sank to close in negative territory for the day. The high in Nifty was 22,783.35 points and it beat the previous high of 22,775.70 points. BSE-Sensex failed to do so and touched a high of 75,111.39 while the previous high was at 75,124.28 points.

For the period under review, markets gained on two of the four sessions with Wednesday being a holiday. BSE Sensex ended the period with gains of 432.78 points or 0.58 per cent to close at 74,482.78 points while Nifty gained 129.85 points or 0.58 per cent to close at 22,604.85 points. Dow Jones gained on two of the five sessions and lost on three. It was down 687.77 points or 1.79 per cent to close at 37,815.92 points.

Shares of Vodafone Idea Limited which were issued through the FPO listed on Thursday, the 25th of April. The previous day’s close (Wednesday) was Rupees 13.09. The discovered price was Rupees 12 and the closing price was Rupees 13.89 on listing day. The share gained Rupees 2.89 from issue price or 26.27 per cent. The share saw profit taking and closed at Rupees 13.20, up 2.20 or 20 per cent.

Indegene Limited will tap the capital markets with its fresh issue for Rs760 crores and an offer for sale of 2,39,32,732 shares in a price band of Rs430-452. The issue would open on Monday the 6th of May and closes on Wednesday the 8th of May. The fresh issue and offer for sale would raise Rs 1,841 crore at the top end of the price band.

The company provides digital led commercialisation services for life sciences industry, including bio-pharmaceutical, emerging biotech and medical devices companies, that assist them with drug development and clinical trials, regulatory submissions, pharmacovigilance and complaints management and the sales and marketing of their products. Indigene is an integrated solutions provider and almost 85 per cent of its revenues comes from its US subsidiary.

The company reported revenues of Rs2,306 crore for the year ended March 23, an EBITDA of 19.69 per cent, and a profit after tax margin of 11.54 per cent. In absolute terms, the profit after tax was Rs266.09 crore. The EPS on a fully diluted basis was Rs11.97. At this EPS, the PE band for the issue is 35.92-37.78.

There is no comparable company or peer set in the India space while there are some comparable foreign companies globally. The share offers an opportunity for investors with a medium to long term outlook. There could be listing pop as well available considering that markets are at lifetime highs or thereabout.

The US Fed meets on Wednesday night for their six weekly meetings and is broadly expected to keep interest rates unchanged. The fact that inflation has risen in the United States is a concern and the markets are worried that the meeting may indicate that the possibility of rate cuts in the immediate future is now ruled out for the major part of the calendar year 2024. Dow had fallen sharply on Tuesday on probably this expectation. Coming to the period 2nd May to 8th May, expect markets to remain volatile and choppy. Any news on rate cut could cause sharp moves in the US market and therefore impacting India. Tuesday’s move is confusing and either of two things could happen. We could see markets correcting all over again or making yet another set of new highs. Clarity on this would be available in trading on Thursday and after Wednesday’s Fed meeting.

The strategy for the period ahead would be to buy on sharp dips and sell on any strong rallies that may happen. With results season on, there have been no very positive or disappointing results so far. The banking sector is expected to lead from the front and that is happening as on expected lines. One needs to see some out of the box results to really impact markets.

With market direction uncertain in the short term, trade cautiously. If I were to stick my neck out and predict the direction of markets, I would favour the bears for the coming couple of days.

(The author is the founder of Kejriwal Research and Investment Services,

an advisory firm)