New heights still alluring mkts

The June 8-14 period under review saw markets testing the patience of investors. At the end of the first four days of trading, markets were flat and back to square one as compared to the close of June 7. The turning point was Wednesday. Markets opened weak and then turned mildly positive. BSE Sensex gained 85.55 points or 0.14 per cent to close at 63,228.51 points, while NSE Nifty gained 29.50 points or 0.16 per cent to close at 18,755.90 points.

Dow Jones had a great week gaining on all five days of the week. Dow was up 638.84 points or 1.90 per cent to close at 34,212.12 points. Job employment data released earlier in the period under review was encouraging and inflation has come down sharply. This gives hope that Fed in its meeting later tonight would probably raise interest rates one more time before taking a pause. It could at the same meeting take a pause and probably rely on inflation data and wait for confirmation next time. Actually speaking, the employment data made the ground for one more rate hike, while inflation data merits a pause. It’s a toss up on what the Fed does. Crucial outcomes will be based on Wednesday’s outcome.

RBI in its MPC meeting which concluded on Thursday, June 8, decided to keep repo rates unchanged at 6.50 per cent. This was on expected lines. RBI has conveyed its intention to tackle inflation and make best efforts to bring the same down. The differential between the repo rate in India and the US Fed rate would probably be the lowest ever in over 25-35 years. The rupee needs to show strength and start appreciating slowly, so that the forward cover comes down as we go forward. This would be a big help.

The IPO from Ikio Lighting, which was open during June 6-8, fared very well and beat all expectations. The issue, which comprised a fresh issue of Rs350 crore and an offer for sale of 90 lakh shares, was oversubscribed 67.75 times overall. The QIB portion was subscribed 163.06 times, HNI portion was subscribed 65.38 times and Retail portion was subscribed 14.30 times. There were 16.33 lakh applications received in total. The price band was Rs270-285.

The benchmark indices had made their lifetime highs on December 1, 2022, and we are trying to make new highs once again, but failed to do so. At the same time, action which is concentrated in the mid-cap and small-cap space has moved these indices to new levels altogether. BSE Mid-cap on the December 1 made a high of 26,146 points and then saw a high of 26,440 points on December 15. It hit a low of 23,356 points on the March 28 and since then has been moving in an uptrend virtually non-stop. The high made last Tuesday was 27,989 points. The difference between December 1, 2022, and on Wednesday is 1,850 points or 7.07 per cent.

BSE small-cap had a similar movement as well with the December 1 level being 29,816 points, and then saw a high of 30,092 points on December 15. The 28th March low was 26,120 and the high during the week was 31,876 points. The difference being 1,784 points or 5.93per cent. This is a segment where FPIs are active only in a handful of stocks and even domestic mutual funds are selective. Public participation is large and markets are doing exceedingly well.

Markets can only fire if the heavyweights do well. New highs are round the corner, but just don’t seem to happen. Two of the heavyweights are getting ready to fire. The first being Reliance with impending corporate announcement of record date for demerger of the financial services. The second would be the timeline of the HDFC Twins merger record date. Both these companies have the potential to provide the boost that the markets are looking for. Coming to the June 15-21 period, the domestic markets may attempt to make another high yet again. Whether they succeed or not would depend on the heavyweights chipping in or the two corporate actions. The strategy would be to continue with the mid-cap and small-cap space.

(The author is the founder of

Kejriwal Research and Investment Services, an advisory firm)