Markets were on a roll and they had plenty of action and drama as well in the week gone by. The previously announced holiday on Thursday the 23rd of May on account of Buddha Purnima was cancelled by the exchanges on Monday, considering the fact that two holidays in a week would break the momentum. As events turned out, Thursday was the key pivot for the markets as they gained a massive 1,197 points on BSESENSEX and 370 points on NIFTY on Thursday. In the process, they made new lifetime highs as well. The RBI declaring a dividend of Rupees 2.1 lakh crores for the financial year ended March 2024 was a great help as well, as it ensured that the fiscal deficit which the government is targeting is well under control. At the end of the four day week BSESENSEX gained on two and lost on two sessions while NIFTY gained on three and lost on one session. BSESENSEX gained 1,404.45 points or 1.90% to close at 75,410.39 points while NIFTY gained 455.10 points or 2.02% to close at 22,957.10 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.87%, 1.87% and 1.65% respectively. BSEMIDCAP gained 1.10% while BSESMALLCAP was up 0.08%. The new intraday highs made on Friday were at 75,499.91 points and 23,026.40 points. 

The Indian Rupee had a strong showing during the week and gained 24 paisa or 0.29% to close at Rs 83.10 to the US Dollar. Dow Jones saw selling pressure and lost on three of the five trading sessions. It was down 934 points or 2.33% to close at 39,069.59 points. 

The week gone by saw one new mainboard listing. Shares of Go Digit General Insurance Limited which were issued at Rs 272 listed on Thursday the 23rd of May. The opening price was Rs 281.10 on BSE. Shares closed day one at Rs 305.75, a gain of Rs 33.75 or 12.40%. On Friday, the share lost some ground and closed at Rs 300.15, a reduced gain since listing of Rs 28.15 or 10.35%. 

The issue from Awfis Space Solutions Limited is currently on. The issue consists of a fresh issue of Rs 128 crores and an offer for sale of 1,22,95,699 equity shares in a price band of Rs 364-383. The company as the name suggests is in the business of providing common work spaces on a daily or longer term contracted basis. Currently the company is on a net loss, basis its restated accounts which are showing a declining trend. Looking at the leverage opportunity that the company has and the fact that 75% of the space is rented out, it could be expected that the company should report positive numbers for the year ended March 25. 

The issue opened on Wednesday the 22nd of May and would close on Monday the 27th of May. At the end of day2 of the issue opening it had received decent support with the issue being subscribed an overall 11.4 times. The QIB portion was subscribed 3.39 times, HNI portion 20.98 times and Retail portion was subscribed 21.08 times. Investors looking for listing pop and having a medium term holding period would be rewarded if their application for the share is successful. 

The week ahead sees May futures expire on Thursday the 30th of May. The current value of NIFTY at 22,957.10 points is higher by 386.75 points or 1.71% compared to the May series opening of 22,570.35 points. It would be interesting to note that all the gains have been made in the previous week as prior to this the series was negative. While currently the momentum is with the bulls, one needs to be cautious as to the way that markets may move on election results eve. 

The sixth phase of voting has concluded and now just the 7th and final phase of voting on Saturday the 1st of June remains. With the sharp rally over the last two weeks since markets made a bottom on Monday the 13th of May, they have rallied quite sharply. They have also made new lifetime highs. Very clearly the markets are convinced that the ruling BJP led NDA would form the next government. Exit poll assessment would begin Saturday evening and carry on till results are announced on Tuesday morning. 

With expiry happening during the coming week, volatility on expiry day could get substantially elevated as people decide to lighten positions and adopt a wait and watch attitude. FPIs have been big sellers in the month of May and barring a couple of days sold every day. This excess of liquidity while it was absorbed by domestic institutions could see a mismatch on expiry day. 

Coming to the week ahead, expect sharp volatility as expiry day approaches. The election results getting closer could cause volatility to rise post futures expiry as positions would in all probability get liquidated to a large extent. With limited positions open in the market, Monday to Wednesday in the week 3rd June to 6th June could see really sharp volatility. The strategy for the week ahead would be to reduce positions as the week progresses. Refrain from any overweight positions in either direction as sharp volatility is expected. Analyze exit polls for all they are worth, look at results and then take a call.

Markets were on a roll during the last week and the volatility seems to have reduced. The change visible was the fact that they just rose and are moving towards a nice set-up where they could go in either direction. With last week’s moves they are within striking distance of new lifetime highs. The broad markets more than regained the previous week’s losses. BSESENSEX gained 1,341.47 points or 1.85% to close at 74,005.94 points while NIFTY gained 446.80 points or 2.03% to close at 22,502.00 points. The broader markets saw BSE100, BSE200 and BSE500 gain 2.40%, 2.91% and 3.23% respectively. BSEMIDCAP was up 4.92% while BSESMALLCAP was up 5.65%. Markets gained on five of the six trading sessions during the week. They were open on Saturday as well with a view to test the disaster recovery site which the exchanges have. 

The Indian Rupee gained 16 paisa or 0.19% to close at Rs 83.34 to the US Dollar. Dow Jones continued its strong showing and crossed the 40K mark. It gained on three of the five trading sessions and lost on two. It was up 490.95 points or 1.24% to close at 40,003.59 points. 

There were three listings during the week. The first was Indegene Limited which had issued shares at Rs 452. The share made its debut on Monday at BSE at Rs 659.70, a gain of Rs 207.70 or 45.95%. It then made a low of Rs 527.80 and closed at Rs 570.65. On NSE, it debuted at Rs 655, on debut day, made a low of Rs 527.10 and closed at Rs 570.90, a gain of Rs 118.90 or 26.30%. By Saturday, the share lost further ground and closed at Rs 556.05, a gain of Rs 104.05 or 23.02%. 

The second share to list was TBO TEK Limited which had issued shares at Rs 920. The share debuted at Rs 1,380 on BSE and at Rs 1,426 on NSE. It closed on Wednesday, debut day at Rs 1,404.85, a gain of Rs 484.85 or 52.70%. On NSE, the close was at Rs 1,406.30. The share gained further ground and closed at Rs 1,463.90, a gain of Rs 543.90 or 59.12% on Saturday. 

The third share to list was Aadhar Housing Finance Limited which had issued shares at Rs 315. The debut price was 314.30 on BSE and Rs 315 on NSE. The low the share made was Rs 293.35 on BSE and Rs 292 on NSE. The high was Rs 343.20 on BSE and Rs 343.70 on NSE. The share closed on Wednesday at Rs 329.55, a gain of 14.55 or 4.61%. By Saturday, the share gained marginally and closed at Rs 348.60, a gain of Rs 33.60 or 10.67%. 

The issue from Go Digit General Insurance Limited which had tapped the markets during the week saw the issue get overall subscribed 9.6 times. The price band was Rs 258-272. The QIB portion was subscribed 12.56 times, HNI portion was subscribed 7.24 times and Retail portion was subscribed 4.27 times. There were 5.85 lakh applications in all. 

The week ahead has two trading holidays and would therefore have just three trading sessions. The week begins with a holiday on account of voting for the 5th round of elections to be held on Monday amongst other places in Mumbai. This would be followed by a holiday on Thursday as well. This would break the momentum which one saw being built up during the previous week. 

Post the week, we would have entered the business end of the general elections with just the sixth and seventh rounds left. The final round is on the 1st of June which is Saturday. That evening, we would be bombarded by exit polls of all colors and hues and markets would get a fair sense of what results would be like on Tuesday when they are finally declared. As at the time of writing, the markets very firmly believe that the ruling dispensation would win the elections and have a consecutive third term. The ruling party which had won 303 seats in the 2019 elections, is expected to win around 330 seats and the allies another 45-50 seats. This is what the markets are believing and that gives the strength and momentum being witnessed. This would get fine tuned as the week ahead progresses. 

Coming to the markets in the short three-day period ahead, expect markets to remain volatile and choppy. We have immediate support at the lows made over the last month at 21,800-21,900 on NIFTY. While they look far away currently, a week ago they were almost there. On the resistance side with just a three-day week, all time highs of 22,800 points would act as strong resistances. 

The strategy for the week would be to enter select midcap and small cap stocks which have had good results for the quarter and year ended March 2024. Markets are on a strong wicket and with institutional players either long or short, there would have to be some sort of reversal of roles from FPIs sooner or later. Domestic institutions because of very strong domestic flows would have to continue to invest in the near term. 

In conclusion, the climb upwards will be slow but certainly there. This bull run is unlikely to end very shortly even though there would be profit taking at every level. 

Trade cautiously.