The week went by was on predictable lines and we saw markets react to the set of IT results declared on Thursday the 11th of January in a manner which only markets can. While the net reaction was way above expectations, it was the cause of the explosive move at the markets and what happened thereafter, has given a new lease of life to markets which were consolidating so far. Markets gained on four of the five sessions and were up for the week. The losses on the opening day of the week were significant, hence the net gains were substantially lower than what we saw on Friday. The gains made on Friday were roughly 850 points on BSESENSEX and 250 points on NIFTY. The week ended with BSESENSEX gaining 542.30 points or 0.75% to close at 72,568.45 points while NIFTY gained 183.75 points or 0.85% to close at 21,894.55 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.81%, 0.76% and 0.79% respectively. BSEMIDCAP was up 0.45% while BSESMALLCAP was up 1.56%. The top sectoral gainers for the week were BSEIT which gained 4.58% and followed by BSETECK in third spot gaining 3.93%. 

The Indian Rupee had a strong showing and gained 23 paisa during the week. It closed at Rs 82.92 against the US Dollar. Dow Jones gained on three of the five trading sessions. It closed with gains of 126.87 points or 0.24% to close at 37,592.98 points. 

The IPO from Medi Assist Healthcare Services Limited is tapping the capital markets with its offer for sale of 2,80,28,168 equity shares in a price band of Rs 397-418. The issue would open on Monday the 15th of January and close on Wednesday the 17th of January. The issue would garner between Rs 1,127 crs and Rs 1,171 crs. On Friday it completed its allocation to anchor investors where it allotted 84,08,449 equity shares at the top end of the band of Rs 418. 48.41% of the anchor book was allotted to 11 domestic funds through 18 schemes. This shows that the issue is widely distributed amongst mutual funds, insurance companies and FPIs.

The company is a third party TPA in the health insurance space. It is the market leader and has between 53-55% of the market in this space. It reported revenues of Rs 504.93 crs for the year ended March 23 with a PAT margin of 14.54%. The reported Pat was Rs 75.30 crs and the fully diluted EPS Rs 10.65. The PE band is 36.66 to 38.60 times. Being a market leader and the first of its kind in the category, the issue would set a benchmark going forward. With fragmented ownership thereafter, not sure whether other players would list from this field. The issue is a tough one to understand and would do well based on perception and growth on better penetration of health insurance schemes going forward. 

Coming to the markets and what happened last week, one finds that the IT pack has been under owned and was technically short sold or oversold. This, post the results which were broadly on expected lines and the commentary post the results gave an indication that there has been no deterioration during the quarter, giving the momentum that markets were lacking. The sharp rally in IT stocks led by HCL Tech which gained 7.68%, Infosys up 5.15%, Tech Mahindra 4.68% and TCS up 3.85%, helped the benchmark indices gain and turn the sentiment. Heavyweight Reliance too chipped in with gains of 5.10% which provided substantial weightage to an otherwise rangebound index in a consolidation phase. 

Readers would recall that post declaration of 5 state election results on Sunday the 3rd of December 2023, markets had rallied sharply on Monday by 416 points on NIFTY and 1,384 points on BSESENSEX. At that time, I was talking of a further rally of 10% plus minus 2% from those levels. It appears we are well on course to do so by the time the country votes in April and mid-May for the general elections 2024. For the record post the Monday 4th December gains, we are now up a further 1,210 points on NIFTY and 3,223 points on BSESENSEX. We have some distance to go but is even more time remaining. This implies that it would not be smooth sailing, or a one-way move but would have corrections and consolidation on the way. 

Coming to the week ahead, we would see markets try to build on the break out sort of move that we have witnessed. Results season is on and stocks would react to results being reported as we saw in the case of the IT pack. It therefore makes sense to move to the large cap stocks and move away from the small cap and midcap space. Over the last few days. FPIs have turned relatively quiet and have sold small quantities in the cash market. Their total sales have been about Rs 3,500 crs over the last week while domestic institutions have bought shares worth Rs 6,900 crs. One now needs to look at the larger picture rather than week to week. The budget would be presented on Thursday the 1st of February and while it would be a vote on account type of budget it could have some items for the middle class and also become an election budget. 

The strategy for the week would be to look at large cap stocks and play in general on the long side using dips to buy and strong rallies to sell. While the three-to-four-month view is bullish it would be a measured move rather than runaway. 

Trade cautiously. 

The first week of calendar year 2024 was a tough one for the markets with they undecided which way to go. Markets gained on three of the five sessions and lost on two. After an eventful week where bulls and bears both tried to take control of proceedings and failed, the week saw BSESENSEX lose 214.11 points or 0.30% to close at 72,026.15 points, while NIFTY lost 20.60 points or 0.09% to close at 21,710.80 points. The broader markets behaved differently and one saw BSE100, BSE200 and BSE500 gain 0.26%, 0.60% and 0.82% respectively. BSEMIDCAP gained 2.35% while BSESMALLCAP was up 2.68%. 

The Indian Rupee gained 6 paisa or 0.07% to close at Rs 83.15 to the US Dollar. Dow Jones gained on three of the four sessions and lost on just one. Yet Dow was at the receiving end and closed lower with losses of 223.43 points or 0.59% to close at 37,466.11 points. 

The big players traditionally used to be the FPIs and their course of action would determine the trend on Dalal Street. This seems to have changed over time. While what they do is significant, it no longer controls the market. Domestic retail investors through SIPs and mutual funds have given these mutual funds enough power to take on the might of FPIs. 

We saw through the earlier part of 2023, that even though FPIs were big sellers, our markets remained resilient and were at most of the time sideways or continued to trend upwards. This new found strength over the last year or so has held markets in good stead and is forcing FPIs to relook at India. The fact that the economy is resilient in the face of adversities is another big positive. This is adding strength to markets and changing the outlook that people have about our markets. 

The week ahead sees three major IT companies declare results on Thursday the 11th of January. The companies are TCS, Infosys and Wipro. The sector has been under pressure for some time and we saw a strong rearguard action in the sector during the last week of calendar year 2023. Whether the action was a mere rearguard action or based on fundamentals, would be known on Thursday evening. Suffice to say that IT pack has the potential to be a game changer next week. 

FPIs were net buyers of equity in the cash market to the extent of approximately Rs 32,000 crs in the month of December while Domestic institutions were buyers of roughly Rs 13,000 crs. In the first week of January, FPIs were buyers of Rs 3,300 crs while domestic institutions were sellers of Rs 7,300 crs. While its early days as yet, one needs to see what are the alternatives for investment that global funds have. Currently India is a hot destination and being one of the outperformers is becoming a must invest choice for all. 

Coming to the week ahead, we will see a volatile market which will continue to look for directions. There is no trend and markets are trying to find their base and rhythm. Results season for the October -December 23 quarter would start kicking in, and that would hold the key for the trend that markets move on. The strategy would be to play safe and sell on strong rallies and buy on sharp dips. Intra-day trading opportunities would be the order of the day across sectors.  A good strategy could be to play in stocks whose results are to be declared as they tend to become super volatile around that time. Based on any strong trends in the sector leaders, one could expect the peer group to take cues from the front runners. This should be a good trend setter for the coming weeks. 

In terms of levels of resistance and support, markets after their sharp spurt in December 23 are still trying to find a trading zone. I believe this could take a couple of weeks to be determined. Till such time that a new trading zone is established, markets will remain volatile, range bound and fairly unpredictable. Importantly, the low volumes currently being witnessed need to pick up before a trend can be found. 

Trade cautiously.