Volatility may rise further

The period December 15-21 under review saw markets under pressure. They were volatile and left people guessing about the trend going forward. Markets gained on just one day (Monday December 19) and lost on the remaining four days. BSE Sensex lost 1,610.67 points or 2.57 percent to close at 61,067.24 points, while Nifty lost 390.30 points or 2.09 percent to close at 18,199.10 points. With less than seven trading sessions left before calendar year 2022 ends, it is becoming more and more difficult and it looks as almost impossible for the expected Santa Claus rally to happen.

A big concern for markets is how Covid-19 would play out in China going forward. A large portion of the Chinese people living overseas return to mainland China for their holidays. With the situation looking grim as per sketchy reports from China, this is something which could derail global markets from whatever strength that may be there. All of us remember what the two years of Covid meant. The Indian government has also issued an alert for Covid and asked the administration to monitor cases carefully.

Dow Jones has been volatile and under pressure, ever after the rate hike which happened last week. FED raised rates by 50 basis points to increase the rate band to 4.25-4.50 percent. For the calendar year 2023, they have indicated that the same could be higher by at least 75 basis points higher. Dow lost on the first four sessions of the period under review continuously, before a small recovery on Tuesday. Dow Jones lost 1,258.90 points or 3.69 percent to close at 32,849.74 points.

In primary market news, there are currently two issues open of which one would close today and the other close on Thursday. Yet another issue would open on Friday and close on Tuesday. In terms of listing, one issue would list on Thursday, while two would list on Friday.

The issue from KFIN Technologies had tapped the capital markets with its offer for sale for Rs1,500 crore, closed for subscription on Wednesday. The price band of the issue was Rs 347-366. The issue received muted response overall as the perception about the issue was that it was expensive. The PE investor who also happened to be the selling shareholder, priced the issue at the same levels as the market leader and left nothing on the table. The issue was subscribed overall 2.73 times. QIB book was subscribed 4.40 times, HNI portion was undersubscribed 0.25 times and Retail portion was subscribed 1.40 times. There were 111,497 applications in the issue.

The issue from ELIN Electronics Limited had tapped the capital markets with its fresh issue for Rs175 crore and an offer for sale of Rs300 crore. The issue had opened on Tuesday the 20th of December and would close on Thursday the 22nd. The price band of the issue is Rs 234-247. At the end of day 2, the issue was overall subscribed 1.00 times with QIB portion subscribed 0.01 times, HNI portion subscribed 1.36 times and Retail portion subscribed 1.40 times. There were 1.39 lakh applications.

The issue from Radiant Cash Management Services Limited would open on Friday the 23rd of December and close on Tuesday the 27th of December. The issue consists of a fresh issue of Rs60 crore and an offer for sale of 3.31cr shares in a price band of Rs 94-99. The company is into the business of retail cash collection and management and is the dominant player, with the bulk of its revenues coming from Tier-2, Tier-3 and Tier-4 towns.

The issue from Sula Vineyards Limited would be listed on Thursday. Similarly, the issues from Landmark Cars Limited and Abans Holdings Limited would also be listed on Friday. The markets for primary issues or IPOs seem to have become lukewarm. Investors are complaining that the valuations and premiums during the issue subscription have disappeared. While the calendar year is coming to an end, one hopes that in the second fortnight of January when there would be a sudden burst of equity issues tapping the markets, this valuation complaint is not there.

Coming to the markets in the period for December 22-28, would see markets under tremendous pressure. The poor performance of markets in the week gone by would add pressure on them. Key levels of support have been broken on the benchmark indices where they hovered over the last three days. These levels of around 61,000 on BSE Sensex and around 18,200 on Nifty, have been broken during Wednesday's trading. These levels acted as support on Monday and Tuesday. The last day of the period under review would be one day prior to December Futures and Options expiry, adding to the volatility and uncertainty.

The strategy for the period ahead would be to sell on any rallies and refraining from adding any long positions. The fall and breakdown from key levels of support would be painful and swift on the downside.

(The author is the founder of

Kejriwal Research and Investment Services, an advisory firm)