Trade cautiously as mkts consolidating

Trading for the New Year 2021 began on a brisk note in India and markets continued their upward movement. Global markets were closed on the 1st of January as people celebrated New Year. The gains continued on Monday and Tuesday but not without the customary scare where markets turned weak intraday and then recovered.

The gains made in three trading sessions were 570 points on BSE Sensex and 181 points on Nifty. Wednesday turned the tide with markets oscillating between positive and negative and finally closed in the red losing 263 points on the Sensex and 53 points on Nifty. Does this Wednesday fall mean the Bull Run is over? Certainly not.

The coming days would see volatility continue simply because there is that small uncertainty about US politics concerning control of the Senate. That would get resolved in the next couple of days and also the last-ditch effort of outgoing President Donald Trump to hold on to his presidency even though he has lost. With this behind us by the end of the week, the swearing in of Joe Biden would be the centre stage.

The IT index seems to be on a roll. Two of the heavyweights in the pack have been in the news over the last few days. TCS completed its buyback last yearend at a price of Rs 3,000 and the closing price today crossed that and the share closed at Rs 3,053. Wipro, whose buyback at Rs 400 is currently on, closed at a price of Rs 406.55. This shows the strength in the IT pack and the smart gains registered by these stocks as the buyback price when announced were at a substantial premium to the then market price.

Results season kicks in with TCS announcing results on Friday the 8th of January, and both Infosys and Wipro doing so on Wednesday the 13th of January. Markets would clearly track these quarterly results to gauge the growth in sectors as the GST collection has touched Rs 1.15 lakh crore for the month of December. The auto sector, which was in a very bad shape before Covid-19 induced lockdown began towards the end of March, seems to be in the best of health currently with there being a waiting list for most of the popular models.

The remaining two days of the current week would be choppy and volatile. It would be fair to assume that the action or focus would continue to remain the broader markets and select midcap and smallcap stocks would be in action every day. Different stocks would move on different days.

Money making has become too easy and this becomes the concern. Expect markets to therefore give you opportunities to buy and sell. With the rally having been long and running for almost nine months now, it certainly is time to consolidate. Take money to the table and use sharp dips to buy. Finally, be wary of buying anything on just hearsay. Do check fundamentals before buying at these elevated levels.

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