Sensex hitting 50,000 milestone imminent

THE week gone by saw markets gain on a weekly basis, but there was much more drama than one could have anticipated. Thursday, January 14 saw markets trade negatively intraday and then recover to post small gains. Friday and Monday saw sharp corrections with the BSE Sensex losing 550 points and 470 points. The intraday low was 48,403 points. Tuesday saw massive gains with BSE Sensex gaining 850 points followed by a strong Wednesday where there were gains of 394 points.

On a net basis, the BSE Sensex gained 299.8 points or 0.60% for the week but the swing was of 2,500 points as the index first lost 1100 points and then gained 1400 points. NIFTY gained 79.85 points or 0.54%. The closing levels were 49,792.12 points with a new lifetime high registered today of 49,874.42 points. NIFTY closed at 14,644.70 points with a new lifetime high of 14,666.45 points.

The gainers on the indices are different on different days and they are concentrated gainers. For example, on Tuesday the top five gainers which included HDFC, Reliance, ICICI Bank, HDFC Bank and Bajaj Finance. These contributed 446 points of the 850 points. Today, Reliance, Infosys and HDFC contributed 244 points of the 393 points gained. I had recommended that investors take money off the table and those who have done that would have got ample opportunities to buy again. There are another 6 trading sessions before the budget is presented on February 1, Monday. Before that, futures for the month of January would expire on January 28, Thursday. You would have a minimum of one more sharp fall and rally from these levels before we enter Budget day. Use the opportunities that come your way judiciously.

The issue from Indian Railway Finance Corporation Limited closed for subscription today. The issue was subscribed roughly 3.5 times and saw about 25.45 lakh applications in the Rs 4,633-cr issue. Subscription levels clearly suggest that retail investors have subscribed to the issue in full earnest and there is a huge interest generated from many new or recent investors who have entered the capital markets.

There is a sudden spurt in IPOs and there is an issue opening almost every day till the budget happens. We saw an issue which opened on Monday, closing today (IRFC). We have an issue which has opened today (Indigo Paints) and would see the same happening till Monday. This is probably because promoters and merchant bankers are feeling that the present market optimism may not remain post Budget. The issue from Home First Finance Company Limited would open on January 21. The last issue would be from Stove Kraft Limited which would open on January 25, Monday.

We are at a very important juncture of the market rally at this point. The 50k mark on the BSE Sensex is upon us and would happen tomorrow morning if we open positive. The next important level would be the 15k mark on NIFTY which is some distance away and would correspond with the 51k mark on the BSE Sensex. Whether we would achieve this before budget is uncertain. The strategy for investors would continue to sell in rallies and buy on sharp dips as we saw in the previous week. Play only on the shares that you own and do not try to short the markets as that may be much more dangerous than anticipated.

(The author is the founder of Kejriwal Research and Investment Services, an advisory firm)