Trend reversal likely amid market jitters
It may be said that the risk-reward may not favour the bulls. There would be sharp two-sided movements which may shake the confidence and upset even die-hard bulls. Further, the correction may force decisions which may not be the best and certainly cause harm
image for illustrative purpose
The first and foremost is to lighten the overall exposure and shift to some amount of cash. Secondly, if one wants to be bold and adventurous and not exit markets, trade or shift exposure to the given list of BSE Sensex and Nifty stocks as they have the highest safety
The stock markets continued to rally in the initial part of the period under review of September 2-8 and saw BSE Sensex gaining 912.05 points or 1.57 per cent to close at 58,250.26 points. NSE Nifty gained 277.25 points or 1.60 per cent to close at 17,353.50 points. Markets gained on the first three days of the period and suffered minor losses on the remaining two days. In the process they also made new closing highs on September 6 on both the BSE Sensex and Nifty, while they made intraday highs on September 7. The closing high was 58,296.91 points and 58,553.07 points as intraday high on BSE Sensex. Closing high on Nifty was 17,377.8 points, while intraday was 17,436.50 points.
What these two days of consolidation have done is created an opportunity for markets to catch their breath and force players to review their market expectation from hereon. Further, the extremely overbought situation in the market has corrected somewhat as well.
Dow Jones in the last five trading days have gained on one day and lost on four of them. Cumulatively, they are down about 260 points. Here again one is finding that market trend is quite unclear. Sebi has notified that stock exchanges may introduce with effect from January 1, 2022, the T+1 day settlement on the exchanges in stocks which are pre-selected and also continue with the normal T+2 settlement which is the norm currently. Its early days and not clear how this would move. One thing, however, is very clear is the fact that this would be highly beneficial to online broking platforms and detrimental to the interests of conventional brokerage houses until they adapt technology.
In economic news, the Cabinet has approved a Rs10,683-cr production linked incentive scheme for the textiles sector. This would be the incentive paid over the next five years based on investments made. More details would be available in the next couple of days.
The good news on the Covid front is the rapid increase in number of people who are being vaccinated. The number has crossed the 70 crore mark and it is now believed that more than half the population in the 18+ category has received one or more vaccines. This is a very positive sign, but not something to relax or let down our guard as we have the festival season coming in four weeks' time. This is when we would have to follow the strictest of procedures and protocol.
The period ahead of September 9-15 would see a holiday on Friday (September 10). It would also see the listing of the two issues which had tapped the markets last week. They are Vijaya Diagnostics Limited and Ami Organics Limited. While Vijaya was subscribed 4.54 times, Ami Organics was subscribed 64.59 times.
Coming to the markets, we seem to have reached important milestones and expected targets as of now. While this is not to suggest that this is the peak and we would have a reversal from here onwards, it may be said that the risk-reward may not favour the bulls. There would be sharp two-sided movements which may shake the confidence and upset even die-hard bulls. Further, the correction may force decisions which may not be the best and certainly cause harm.
Considering the stage, we are in, it makes imminent sense to do a couple of things. The first and foremost is to lighten the overall exposure and shift to some amount of cash. Secondly, if one wants to be bold and adventurous and not exit markets, trade or shift exposure to the given list of BSE Sensex and Nifty stocks as they have the highest safety. Thirdly use sharp dips and rallies to buy and sell stocks. The emphasis is on sharp and that should be strictly followed. In conclusion, brace oneself in the coming period to witness sharp volatility accompanied by period of low volumes. Trade extremely cautiously and take fresh positions with strict stop losses.
(The author is the founder of Kejriwal Research and Investment Services, an advisory firm)
