Markets will continue to remain volatile, choppy

The period under review from March 23 to 29 was volatile intraday, but fairly quiet and sedate on a weekly basis.

BSE SENSEX lost on three of the five sessions and gained on two sessions. Wednesday was expiry day for March futures and also the last day of trading for the financial year 2022-2023. BSESENSEX lost 254.50 points or 0.44 per cent to close at 57,960.09 points while NIFTY lost 34.20 points or 0.20 per cent to close at 17,117.20 points. Pressure was seen in the midcap and Smallcap space across the board.

The US Fed hiked interest rates by the expected 25 basis points. The rate band is now at 4.75 per cent-5.00 per cent. This is the ninth consecutive rate hike since the FED began raising rates from March 22. Suffice to say that because of the high inflation, rates which were at 0-0.25 per cent one year ago, are now at 4.75 per cent-5.00 per cent. Further, Jerome Powell, post the announcement has not said or conveyed that there would be an immediate pause going forward. There may be further hikes and then a pause. Keep your fingers crossed. A point to be kept in mind is that 2/3rd of the Quantitative Tightening has been returned post the bank failure.

The bank SVB where the current crisis has its origin has been sold or transferred to First Citizens Bank. Whether this would put the banking crisis at rest or continue, only time will tell. But suffice to say, that all is not well.

March futures expired on Wednesday at 17,117.70 points. The series loss was 393.55 points or 2.24 per cent. It was a tough series and the number of days that markets rallied were limited while the number of days that it was under pressure was greater. Another notable feature was the fact that we hardly had big volatility and there were just four trading sessions in the month of March where the BSESENSEX saw a net change of 500 points for the day.

There is one primary issue or IPO coming up in the period ahead. Avalon Technologies Limited is tapping the capital markets with its fresh issue for Rs 320 crs and an offer for sale of Rs 545 crs. The issue opens on Monday the 3rd of April and closes on Thursday the 6th of April. The price band is Rs 415-436. The company is a leading fully integrated electronics manufacturing (EMS) player with end-to-end operations in delivering box build solutions in India. The focus is on high value precision engineered products.

The company reported revenues of Rs 840.72 crore for the year ended March 22 and a net profit of Rs 68.16 crore. For the eight-month period ended November 2022, revenues were at Rs 584.78 crore while net profit was Rs 34.18 crore. The EPS for the year ended March 22 was Rs 11.30 while for the eight month period not annualised it is Rs 6.10. Based on the full year March 22 earnings, the PE ratio is 36.73-38.58 times. The business of the company is niche and it is a small player in a very big pond which has huge opportunities. With an order book that is greater than its annual turnover, it would be looking to expand its facilities and has already got a 1.5 lakh square feet facility ready for the same. I believe investment in the company by an investor with a medium to long term horizon would be worth his while.

Coming to the week ahead in the period from March 20 to April 5, would be a very short trading week with just three days of trading. There are holidays on Thursday and Tuesday and as a result of the same, volatility and volumes would be affected. Both the holidays in India would see trading happening globally which would ensure that people remain light in terms of commitments in the market. The week would continue to remain volatile and choppy. Key support levels would be at 16,600-16,650 on NIFTY and 56,500-56,650 on BSESENSEX. If this does get broken, we would have strong support a little lower at 16,400-16,450 and 56,000-56,150 respectively. On the resistance side, the first level would be 17,150-17,200 on NIFTY and 58,150-58,350 on BSESENSEX. In case this does get violated, the next levels would be at 17,300-17,350 on NIFTY and 58,600-58,750. The second level needs tremendous buying to be touched or violated. A key pivot for the markets in the week ahead would be 17,100 on NIFTY and 57,950 on BSESENSEX.

The trading strategy would be to sell on sharp rallies and buy on dips and concentrate on the large cap stocks only. Refrain from having overnight positions before the holiday as it could lead to sharp movements after being shut for a holiday.

(The author is the founder of

Kejriwal Research and Investment Services, an advisory firm)