Volatile trading likely on expiry day

Two of the recent IPO's from Shyam Metalics and Energy Limited and Sona BLW Precision Forgings Limited would be listing on the bourses on Thursday. Shyam Metalics had received excellent response for its Rs657-cr fresh issue and Rs252-cr offer for sale

The period under review from Thursday (June 17) to Wednesday (June 23), saw markets move in all directions before they finally closed with small losses. BSE Sensex lost 195.90 points or 0.37 per cent to close at 52,306.08 points, while Nifty lost 80.60 points or 0.51 per cent to close at 15,686.95 points. In this duration they gained on one day, lost on two days and had a flattish movement on two other days. Monday was an exceptional day, which saw markets opening quite weak, but bouncing back very sharply. BSE Sensex opened at 51,887 points, made a low of 51,740.19 points, a high of 52,629.18 points and closed at 52,574.46 points.

The intra-day swing was 889 points and the net gain was 230 points. On Nifty, the open was 15,525.85 points, high was 15,765.15 points, low was 15,505.65 and close was 15746.50 points. The intra-day swing was 260 points and the net gain was 63 points. Monday was the saving grace for the markets.

June series futures expire on Thursday (June 24) and the current value of Nifty suggests that bulls are in complete control with the series ahead by 349.10 points or 2.27 per cent. With just one day to go there could hardly be significant damage to make them relinquish the control on the series.

State Bank of India (SBI) would be a big beneficiary as today shares of Vijay Mallya totalling about Rs 6,200 crs were sold under instructions of the DRT (debt recovery tribunal). This would be added to the bottom line of the bank's balance sheet when they report results for the quarter ended June 2021.

Two of the recent IPO's from Shyam Metalics and Energy Limited and Sona BLW Precision Forgings Limited would be listing on the bourses on Thursday. Shyam Metalics had received excellent response for its Rs657-crore fresh issue and Rs252-crore offer for sale. The price band was Rs 303-306 and the issue was subscribed 120.93 times. Sona BLW had tapped the markets with its fresh issue of Rs 300 crore and an offer for sale of Rs 5,250 crore in a price band of Rs 286-291 and was subscribed 2.28 times.

During the week under review, BSE Sensex hit a new intra-day high of 53,057.11 points on Tuesday June 22, while the same on Nifty remains at the previous week's high of 15,901.75 points.

Dow Jones has been having a volatile time and we have seen over 500 points movement on two consecutive days. Last Friday the June 18 saw Dow lose 533 points and the following day on Monday, saw it gain 587 points. Irrespective of this move, the five-day period, Wednesday to Tuesday saw Dow lose 354 points or 1.03 per cent. Markets even in the US are worried post the commentary of Fed on interest rates likely to rise about a year ahead of time.

Coming to the week ahead which begins with expiry day, would see sharp and volatile movements on Thursday. The day could see it end in either direction and would also find different stocks moving differently. Friday, the beginning of July series would in all probability see markets beginning on a positive note. The July series would be a long one beginning on June 24 and ending on July 29, duration of five weeks.

This would ensure high volatility and would see a good number of results of the April-June results being declared as well. Carrying on with the period under review of June 24 to July 1, we would see markets trying to gain momentum and the bears trying to push it down. It would be an interesting battle to watch.

Use sharp dips to buy and rallies to sell. Move into fundamentally stronger large cap stocks, as midcap and small cap stocks seem to be running out of gas.

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