No Rapid Movements In Markets

The period under review from 21st November to 27th November had all the action one could imagine or think of. Maharashtra went to polls along with the second phase of voting in Jharkhand. Thursday markets were rattled with statements about the US court and Adani. It was however enough to rattle the markets and the exit polls announced on Wednesday had no impact. Friday saw markets reverse and gain what was lost on Thursday and much more. The good work continued on Monday post a landslide victory by the ruling NDA in Maharashtra. The party won a mandate of 230 seats out of 288. Mumbai being the financial capital of the country, this victory meant a lot as going forward as and when Rajya Sabha elections are held, there would be an impact on the number of seats from Maharashtra.

BSE-SENSEX rallied a massive 2,655.70 points or 3.42 per cent to close at 80,234.08 points while NIFTY gained 756.40 points or 3.22 per cent to close at 29,274.90 points during the period under review. The participation of midcap and small cap has been significantly lower than the benchmark indices. Markets gained on three of the five trading sessions and lost on two. Dow Jones gained on all five trading sessions and had a great period under review. It gained 1,591.37 points or 3.68 per cent to close at 44,860.31 points.

In primary market news, we saw the listing of NTPC Green Energy Limited which was a blockbuster and took most people by surprise by its spectacular performance. The company had issued shares at Rs 108. The discovered price was Rs 111.60 on BSE and Rs 110.50 on NSE. While the share was locked at upper circuit for some time, the share closed marginally lower at Rs 122.10 on BSE and Rs 121.65 on NSE. The gain was Rs 14.10 or 13.05 per cent on BSE and Rs 13.65 or 12.63 per cent on NSE. The listing was beyond expectation. What would happen in the coming days is anybody’s guess as on the valuation front the share is expensive without doubt.

Friday saw the listing of yet another share, Zinka Logistics list and stumble on day one. The shares were issued at Rs 273 and closed day one at Rs 260.05, a loss of Rs 12.95 or 4.74 per cent. By Wednesday the share recovered some ground to close at Rs 263.20, a loss of Rs 9.80 or 3.59 per cent.

Coming to the primary markets, there is a fatigue factor in the markets and issue after issue are opening below the issue price on listing. Valuations are being stretched to no end and the benchmarks are being raised. There is an issue which will be opening later this week in the diagnostics space which has a PE multiple of three digits. How is one expected to invest in such a share and when would an investor make money, BEATS ME. So be it and probably some more issues like this will ensure that the goose which lays the golden egg, gets killed.

Coming to the period ahead from 28th November to 4th December, markets will begin with futures expiring on the opening day. The low of the series was 23,263 and on Wednesday, it closed at 24,274.90 points, a weekly range of over 1,000 points. What is really surprising is that of this change, 756 points were recovered in just the last five days. Currently the November futures are actually up 69.55 points or 0.29%. The good part about this series has been that the longs were squeezed out when the markets fell, while the shorts were squeezed out when markets rallied over the last four days. Effectively when trading begins for the new series on Friday, open positions would be fairly light and quiet evenly balanced

Coming to the strategy, nothing has changed on the economic front and the concerns of valuations based on poor quarter results continue. The global scenario seems to be improving with Israel and Hezbollah on the verge of calling a ceasefire. What happens in the US under a new President is still seven weeks away and the statements emerging are about raising the duty on neighbouring states. Not the best globally but you get what you voted for. As far as markets are concerned, expect no rapid movement in either direction till the end of the current calendar year and expect markets to trade in a broad band with levels of 24,500-24,600 on the higher side and 23,250-23,400 on the lower side. A breakout or breakdown from these levels is imminent for further movement. It’s now time to trade extra cautiously as the good news from the election outcome has played out much better than expected.

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

an advisory firm)