Narrow-range trading likely ahead of poll results

In the week ahead, support exists at the lows made on Thursday and the previous lows made on April 19, if they are broken support exists around 21,500 for Nifty and at 71,650 points for Sensex

The domestic stock markets in May 9-15 period continued to remain volatile and choppy. We had that one day on Thursday (May 9), when all hell broke loose and one saw BSE Sensex lose 1,062 points, while Nifty lost 345 points. To expect markets to recover from this hit within a period of a week, is tough. BSE Sensex lost on two of the five trading sessions and gained on two. Wednesday was an undecided day and opened in the green, but gave way towards mid-day, to finally close in the red. BSE Sensex lost 479.36 points or 0.65 per cent to close at 73,987.03 points, while Nifty lost 108.95 points or 0.46 per cent to close at 22,200.55 points. Dow Jones gained on three of the five sessions. Dow Jones gained 547.25 points or 1.41 per cent to close at 39,431.51 points.

There were three listings during the period under review. The first was Indegene Ltd, which had issued shares at Rs452. The share made its debut on Monday at BSE at Rs659.70, a gain of Rs207.70 or 45.95 per cent. It then made a low of Rs527.80 and closed at Rs570.65. On NSE, it debuted at Rs655, on debut day, made a low of Rs527.10 and closed at Rs570.90, a gain of Rs118.90 or 26.30 per cent. By Wednesday, the share had remained fairly steady and closed at Rs566.75, down from Rs570.65 on debut day.

The second share to list was TBO TEK Ltd, which had issued shares at Rs920. The share debuted at Rs1,380 on BSE and at Rs1,426 on NSE. It closed on Wednesday at Rs1,404.85, a gain of Rs484.85 or 52.70 per cent. On NSE, the close was at Rs1,406.30

The third share to list was Aadhar Housing Finance Ltd, which had issued shares at Rs315. The debut price was 314.30 on BSE and Rs315 on NSE. The low the share made was Rs293.35 on BSE and Rs292 on NSE. The high was Rs343.20 on BSE and Rs343.70 on NSE. The share closed at Rs329.55, a gain of 14.55 or 4.61 per cent.

The week ahead sees one IPO from general insurer, Go Digit General Insurance Limited. The issue opened on Wednesday (May 13) and would close on Friday (May 15). The issue consists of a fresh issue of Rs1,125 crores and an offer for sale of 5,47,66,392 equity shares in a price band of Rs258-272. The company is promoted by Prom Watsa of Fairfax.

The company helps in customizing products as required in the general insurance space. It became profitable in Fy22-23 and has built on the same in the current nine months ended December 23. The valuations based on current nine months are attractive and offer scope for appreciation on listing as well as for people with a minimum, medium term holding period.

The fifth round of voting out of seven phases would be held on Monday (May 20). Voting in Mumbai would be held during this 5thround. As both the exchanges are physically located in Mumbai, it would be a trading holiday for the exchanges as well. In the first fortnight of the current month, FPIs have sold shares worth Rs33,500 crores. Volatility has increased in line with the significance of the event and is further borne out by the fact that FPIs have sold over Rs33,600 crores in the current month which has been counterbalanced by domestic institutions who have spent their entire kitty of record SIP inflows for the month.

Coming to the markets in the week ahead during May 16-22, where the period would be. Support exists at the lows made on Thursday and the previous lows made on April 19, even if they are broken, support exists around 21,500 on Nifty and at 71,650 points on BSE Sensex. On the upside hurdles exist around 22,450-22,500 and at 73,900 points on BSE Sensex. We have not been able to cross the first targets on the upside. These levels need to be broken and sustained for any further up move. Expect markets to trade in a narrow range till then.

Readers should keep in mind the fact that counting would begin on June 4 (Tuesday) with the last round of voting taking place on June 1 (Saturday). Exit polls of the election over seven rounds would bombard the screen from 5pm or 7pm on June 1. Markets would react to the broad consensus of these exit polls on Monday when trading resumes. Its time to trade cautiously.

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

an advisory firm)