Stock markets looking for direction

The period 29th April to 5th May was extremely volatile and choppy. While at the end of the week the benchmark indices were down, it is important to see what happened intraday as well. BSESENSEX lost 1,056.29 points or 2.17 per cent to close at 48,677.55 points. NIFTY lost 246.69 points or 1.69 per cent to close at 14,617.86 points. The indices logged gains on three of the five trading days. The difference though was that the losing days were big losses while of the three days of gains, two were just upticks or small gains.

To give a sense of volatility witnessed during the week on an intra-day basis one can see that the difference between the high and low on Thursday the 29th April was 230 points while the net change was 30 points. On Friday, it was 254 points while net change was 263 points. On Monday the difference was 259 points while change was three points. On Tuesday the difference was 262 points while the change was 138 points. Finally, Wednesday, today the difference was 131 points while the net change was 121 points. The idea of explaining the change and intraday volatility is to make one aware of the volatility and the fact that markets are searching for direction.

Thursday saw April futures expire on a volatile note. After gaining over 180 points intraday, NIFTY surrendered 150 points and ended with gains of a mere 30 points. For the series, the gains were 570 points or 3.98 per cent Incidentally, at the end of the previous week on 23rd April, the monthly gains on April futures were a mere 16 points. This means that as much as 555 points were added in four days of trading.

The GST collection for the month of April 2021 was a record 1.41 lac crs which is the highest figure ever. Considering the fact that the comparable figure last year is not comparable as we had a complete lockdown, this figure is impressive as it is. Even considering that partial lockdown exists in many parts of the country currently, the figure may not be repeated in May, it still remains commendable.

SEBI has introduced a provision where key employees of mutual funds would be given a fifth of their income on a cost to company basis in the form of investments in the funds that they operate. This would allay the fear of many investors who question whether the fund manager has any skin in the game. While leading fund houses have already been doing the same, the general diktat would be a welcome step.

Covid-19 is presently playing havoc with the people of this country. The sharp rise in cases even though in pockets is becoming worrisome for all concerned. While Mumbai which was one of the alarming spots seems to have come under control and cases seem to have peaked off, its still early days. There are many more such pockets and a lot need to be done by all concerned. We should be able to breathe easy in the next four to six weeks.

PowerGrid Infrastructure Investment Trust which had tapped the capital markets with its fresh issue and offer for sale of Rs 7,735 crs was subscribed 4.83 times. There were just two buckets. In the QIB category the issue was subscribed 4.63 times while in the non-institution category it was subscribed 5.07 times. There were over 46,200 forms. The average application size was about 21.20 lacs. The issue including anchor portion received bids for over 24,000 crs against the issue size of 7,735 crs. This was the first ever INVIT issue from the PSU stable.

Markets in the period ahead 6th May to 12th May would try to look for direction. The high of 50,375 on BSE SENSEX which was made on Thursday the 29th of April, a level last seen on 18th of March came and disappeared too soon. We are almost 1,700 points away from that level in just four trading days. The strategy should be to wait for markets to fall before buying and sell on any sharp rallies as we are still in a trading zone. Stability is some time away. The moves are so sharp that money can be made in trading. 'Trade cautiously' is the best advice one can give.