Stick To Large-Caps In Q3 Earnings Season

The January 2-8 period has been tough for markets with their being super volatility on every single day. Markets gained on two of the five trading sessions and lost on three. What is confusing investors is the sharp movement where on the first day of the period under review, markets gained 1.8 per cent and lost half of that on the very next day. This is confusing investors and making them nervous. BSE Sensex lost 359.01 points or 0.46 per cent to close at 78,148.40 points, while Nifty lost 54.00 points or 0.23 per cent to close at 23,688.90 points.

Dow Jones lost on three of the four trading sessions. It ended virtually flat for the period losing a mere 15.86 points or 0.04 per cent to close at 42,528.36 points. The period ahead would continue to remain volatile and choppy.

In primary market news the issue from Standard Glass Lining Technology Ltd, which is tapping the capital markets with its fresh issue to raise Rs210 crore and an offer for sale of 1,42,89,367 shares in a price band of Rs133-140. The issue has opened on Monday (January 6) and close on Wednesday (January 8). This would be the first issue for calendar year 2025.

The company is a specialized engineering equipment manufacturer in India with in-house capabilities to manufacture all the core specialized engineering equipment required in the active pharmaceutical ingredient (API) and fine chemical products manufacturing process. Latest subscription figures show that the issue is subscribed an overall 183.48 times.

The second is from Quadrant Future Tek Ltd, which is tapping the markets with its fresh issue of 1 crore shares totaling Rs290 crore at the top end of the price band of Rs275-290. The issue has opened on Tuesday (January 7) and would close on Thursday (January 9). The company has just received a large order from the Indian Railways for enhanced railway safety and operations under the ‘Kavach’ program. As this is a new order, the company needs to demonstrate its execution skill sets over the next 12 months. Close to the end of day two of the issue being open, the issue is subscribed an overall 46.75 times.

There are three events coming up in the next 23 days. The first is the results season for third quarter for the period October-December. The second is US President assuming office and then issuing orders on a host of trade issues, some of which would be positive and some negative for India. The third is the Budget-2025 to be declared on Saturday (February 1). All of these events have the potential to keep the market momentum going and they would give the markets a positive spin in the coming days. A note of caution, however, is that currently the markets seem to lack the steam to run away in a tearing hurry. It would be more of a case of two steps forward and one step backwards. A slow and calibrated approach with markets is moving up as the events unfold.

The first levels of resistance for the markets would be levels of 23,800 and 24,500 points on Nifty and 78,600 80,700-80,800 points on BSE Sensex. This should be a good enough target for the week ahead. On the support side, levels of 23,460 on Nifty and at 77,350 on BSE Sensex would act as supports. If these are broken, then next levels would be at 23,200 and at 76,600 points respectively. The strategy would be to look at large-cap stocks as they would be the ones which are the first of the block. FPI buying would come in them and that would move markets. Further one small secret, the large-cap companies tend to declare results faster than the rest of the markets. Trade cautiously.

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

an advisory firm)