Last week saw a sell off on expiry day followed by huge gains the following day. The net result saw the BSESENSEX end the week with losses of 266.12 points or 0.75% at 35,423.48 points. NIFTY lost 107.55 points or 1.00% to close at 10,714.30 points. Midcap and Smallcap ended with losses of 2.52% and 3.17% respectively. In the process of the sell- off on Thursday of 35,000 on the SENSEX and 10,700 on NIFTY were broken. They were however retaken on Friday but have made the levels vulnerable.
Dow Jones gained on Friday but lost for the week and was down 309.48 points or 1.28% at 24,271.41 points. On a year to date basis Dow Jones is down 1.81% and from the top made on 29th January it is down 9.66%.
June futures expired on a weak note with the series down 147.05 points or 1.39% at 10,589.10 points. Dow Jones gained on Friday but lost for the week and was down 309.48 points or 1.28% at 24,271.41 points. The loss during the four days of the week was higher at 232 points.
In primary market news the offer for sale from Varroc Engineering Limited was open during the week. The issue was subscribed 3.59 times with QIB portion subscribed 9.16 times and HNI 2.45 times. Retail and Employee portions remained undersubscribed at 0.95 times and 0.65 times respectively. Why choose futures expiry day to close the issue beats me. The subscription levels were certainly affected when markets are down so sharply. While the issue looked attractive, the market fall on Thursday spooked the issue.
The two issues which were open for subscription in the previous week would list on Monday. The first issue is from the Railways, RITES and was subscribed over 67 times. The second one was an offer for sale from speciality chemical maker Fine Organics which was subscribed just about 9 times. It would be interesting to see how they fare. The PSU issue was very attractively priced and left a lot for the investor on the table, while the speciality chemical was richly valued leaving virtually nothing on the table. The proof of the pricing would be once the company declares results for the March quarter which are overdue. A point to note is the fact that Varroc Engineering which had its issue just a week later had declared its March quarter results.
The BSESENSEX is 2.88% lower than the peak of 29th January and NIFTY 4.27%, it’s the Midcap and Smallcap which leave one concerned. MIDCAP is down 18.58% and Smallcap down by 25.89%. This could be partly because of speculative unwinding and because of the realignment of mutual fund schemes.
Over the last 11 years markets have always rallied in July. In 2017 the NIFTY gained 665 points and in 2016 the gain was 700 points. Will history repeat itself? Hope so or will history be made where the rally does not happen.
Technical analysts believe very strongly that markets must come to around 10,400 on the NIFTY before a rally has to happen. Assuming they are to be correct and history is to be repeated this could be a dream month. Keep your fingers crossed.
Markets are looking confused and are not clear in which direction they want to go. My strategy buy on sharp dips for sure and allow clarity to emerge.
