Volatile trading more likely

The period January 5-11 saw markets move in a very volatile manner. They were sharply up on one day and down on the next. The period began with markets falling on Thursday and then a sharp dip on Friday. Monday saw a strong rally where almost all the losses of Friday were made up. Tuesday was yet another day of fall with markets losing sharply. Wednesday, markets were unable to make up their mind as to what they wanted to do. They opened weak but made up all losses and then alternated between minor losses and minor gains. They finally closed with small losses. The week saw markets gain on one of the five trading sessions and lose on the remaining four. BSE Sensex lost 551.95 points or 0.91 per cent to close at 60,105.50 points, while Nifty lost 147.25 points or 0.82 per cent to close at 17,895.70 points.

Dow Jones had an equally choppy time and lost on two of the five sessions, gaining on three. It registered big gains on Friday which was one of the main reasons for the sharp rally on Monday in our markets. Dow Jones gained 434.53 points or 1.31 per cent to close at 33,704.1 points.

TCS declared its October-December quarter results. Its net profit was at Rs 10,846 crs against Rs 9,769 crs in the year ago quarter. Revenues grew at 19.1 per cent to clock Rs58,229 crore against Rs 48,885 crore. EBIT margin was lower by 50 basis points at 24.5 per cent. The company declared a dividend of Rs8 for the quarter and a special dividend of Rs67. Though the street felt that the results were a tad below expectation, share prices fell only during the day to bounce back. At the end of the period under review, they closed at Rs3,328.85, a gain of Rs116.85 or 3.63 per cent against Friday's close of Rs3,212.

Results season has begun and after TCS which declared results, more IT companies would be doing so. HCL Tech and Infosys on Thursday (January 12) and Wipro on Friday (January 13) would be happening. This would give a good indication of what's happening in the IT space with cost pressures or pricing pressures and new order wins. TCS has been able to stand its ground.

During the course of the last couple of weeks of trading, the market seems to be making lower tops, which is a bearish signal by itself. If one recalls, the lifetime highs were made on December 1, 2022. These were at levels of 63,583 on BSE Sensex and 18,887 on Nifty. The next two lower tops were made on December 14 at 62,835 and 18,632 points respectively. The third and final one was made last week on January 3 at 61,343 and 18,265 points. It is therefore imminent that if this bearish pattern is to be negated, we need to cross these levels at the very outset.

Even today (Wednesday), the lows of the day were higher than those made on Friday. So far so good. However, for the markets to become bullish once again the 'Laxman Rekha" would be the levels of 61,343 and 18,265 points respectively. These need to be crossed and sustained. While the pre-budget rally has certainly not begun, one is not sure when that would happen if at all.

The IPO market has taken a break temporarily and is likely to become active after the celebration of the India festival, 'Sankranti' also popular for kite flying on January 15. One should see a sudden rush of IPOs post this day into the week ending just before the Union Budget is presented on Wednesday (February 1). Parliament session would begin a day earlier on January 31.

The period next week, January 12-18, would see markets continue to remain volatile. As explained in detail, we need to cross the levels earmarked and sustain for any rally to happen. Failure to do so could see markets lose ground sharply. Trade cautiously with one eye on what happens in the US and the other at results season.

(The author is the founder of

Kejriwal Research and Investment Services, an advisory firm)