Vigorous volatility in shortened trade week
Fresh surge in Covid cases did the markets in when they began trading for the week on Monday. News of lockdown being introduced in various parts along with night curfew hit markets severely
image for illustrative purpose
IT was a four-day week which began with gains on Thursday, sharp losses on Monday, flat on Tuesday and gains on Wednesday. Volatility continued to be sharp and one saw swings which saw markets move from positive to negative and gains and losses of half a per cent many times during the trading day. At the end of it all, the BSE Sensex gained 152.61 points or 0.31 per cent to close at 49,661.76 points. NIFTY gained 128.35 points or 0.87 per cent to close at 14,819.05 points.
RBI had its MPC (monetary policy committee) meeting over Monday-Wednesday and declared its outcome on Wednesday. In a unanimous decision, the committee agreed to keep all key rates unchanged. This would be the fifth meeting where the rates have been kept unchanged. The Repo rate would continue at 4.00 per cent while reverse repo would be at 3.35 per cent. Further the stance would continue to remain accommodative. Post the announcement of the outcome of the meeting, markets traded in an almost unchanged manner.
Shares of Barbeque Nation Hospitality Limited (BNHL) listed on the bourses and the discovered price was Rs 492 against the issue price of Rs 500. They then rose to hit the high of Rs 590.40, which was the upper circuit of the day and remain locked at that price. Incidentally, the upper circuit was hit around 10.30 am in the morning and remained so. Very clearly the difference between the weighted average of Rs 559.37 on BSE and Rs 543.40 on NSE and their respective closing prices, indicate that the short sellers were caught on the wrong foot. Readers would recall that I had recommended this issue while reviewing the same.
The issue from Macrotech Developers Limited has opened for subscription today and would close on Friday the 9th of April. The issue is looking to raise Rs 2,500 cr from a fresh issue in a price band of Rs 483-486. 27 per cent of the issue has been subscribed on day one.
The fresh surge in Covid-19 cases did the markets in when they began trading for the week on Monday. Maharashtra has been leading the cases from the front and Mumbai and Pune seem to be facing the brunt of new cases. News of lockdown being introduced in various parts along with night curfew hit markets severely. We have state elections which are being bitterly fought in West Bengal, Assam, Tamil Nadu, Kerala and Puducherry. While the crowds attending rallies and political parties campaigning seem to suggest that Covid-19 doesn't exist in these states in India, reality indicates that they are sitting time bombs for a sharp surge once elections are over. At the point of being irritating and repetitive, I would like to make a humble suggestion, wear your mask at all times and maintain social distancing.
Markets have been fairly range bound between 48,250-50,500 on the BSE Sensex and 14,250-14,900 on NIFTY. Each time they come closer to either of these levels they seem to be reacting in the opposite direction. Very clearly for a change in trend or a bigger move, one needs to see markets move beyond these levels. What would be the trigger? It could be positive news on Covid-19 or global cues or a spate of positive results when quarterly numbers are announced next week onwards.
IT companies, FMCG, Metal and auto are all expected to report robust earnings. Further the incentives announced for the realty sector on lower stamp duty rates which were there till 31st March 2021 will see even the down in the dumps sector report their best ever numbers. The strategy should be to sell on sharp rallies and buy on dips and wait for a clear shift in direction. Till that happens there would be trading opportunities on a daily basis. Make use of them.
(The author is the founder of Kejriwal Research and Investment Services, an advisory firm)
