Markets are witnessing extreme volatility and while day traders may be happy with the kind of movement, it is unnerving investors. BSESENSEX lost 506.35 points or 1.48% to close at 33,780.89 points, while NIFTY lost 169.25 points or 1.67% to close at 9,972.90 points. The broader indices saw BSE100, BSE200 and BSE500 lose 1.52%, 1.35% and 1.27% respectively. BSEMIDCAP however gained 0.37% while BSESMALLCAP lost a mere 0.08%. The week gone by wasn’t without its share of drama where on Friday markets opened with a big gap down on the back of 1,861 points fall in Dow Jones on Thursday. BSESENSEX after being down 1,190 points closed for the day with gains of 242 points. A huge intraday swing of almost 1,450 points.
The Indian Rupee lost 26 paisa or 0.34% to close at Rs 75.84 to the US Dollar. Dow Jones had a terrible week and lost 1,505.44 points or 5.55% to close at 25,605.54 points. All of a sudden one felt at the end of the previous week that all negative factors were discounted and there were only positive factors left for the market. This week what one saw on Thursday was a reality check and brought investors to the ground with a big thud.
Reliance Industries has completed its record-breaking rights issue in terms of size and time with a great amount of help from the regulators who allowed a lot of flexibility in terms of compliance in covid-19 affected times. The company has given additional shares to the extent of 2.06cr shares to the 5,45,925 shareholders whose applications were successful. There were 8,958 people who applied as renounces and were allotted 2.46 cr shares. Two key takeaways from this mammoth issue was the fact that of the 25 lac odd shareholders of Reliance Industries just over a fifth participated in the rights offer. To make it more convenient for this bottom of the pyramid shareholders in these difficult times who missed out, the one-page application form could have been printed in the numerous advertisements that the company released. Shareholders could have cut out the same, filled in and submitted to the bank for ASBA. The second takeaway is that the issue has seen the promoters increase their stake in the company from 48.87% to 49.14%. This demonstrates their confidence in the company and its business going forward.
Reliance Industries had tapped the capital markets in 1977, when it was a textile company manufacturing textile. Its logo was ‘Only Vimal’ at that time. In 43 years, the company has evolved into a yarn manufacturer, PTA player, petrochemicals with upstream and downstream capabilities, retail and now telecom. Its latest venture is Jio Platform where it has raised over a trillion rupees by selling 22.38% stake to nine investors in about six weeks’ time. The company Jio Platform is valued at 4.91 trillion Rupees. In today’s time, one fails to recall the last time ‘only Vimal’ fabric was bought by someone. Very clearly there is a transformation where Reliance has shifted tracks and is now focusing on digital and telecom or data and voice for its next stage of growth coupled with retail.
Covid-19 is not good news in India. We have been moving up the ladder for most affected persons and are currently 4th after the USA, Brazil and Russia. The number of affected persons globally has increased to 79.90 lac patients with 4.35 lac deaths and 41.08 lac patients having recovered. In India the number of affected persons is 3,33,008 people with 9,520 deaths and 1,69,689 people having recovered. Compared to the previous week, the world has seen 9.00 lac new patients with 29,300 deaths and 6.47 lac patients recovering. In India, new patients have increased by 76,000, with 2,300 deaths and 46,000 patients recovering. The three worst affected cities in India are Mumbai, Delhi and Chennai. In what can be termed as relief to profiteering by private companies in the name of covid-19, Maharashtra has cut the price of covid-19 test from Rs 4,500 to Rs 2,800. One hopes that the quality of test is now not compromised and safeguards are put in place to ensure that patients are not given a raw deal.
Coming to the markets, they will continue to remain volatile and see sharp intraday rallies and falls, unnerving edgy investors. While the longer term looks better and promising, the immediate short term will remain volatile and full of sharp two-sided moves. Use rallies to sell and sharp dips to buy, but be nimble footed and take profits when available. A bird in hand is always better than what is in the bush. Expect global cues to be even more volatile and hence expect gap-up and gap-down openings on the benchmark indices. Midcap and Smallcap will outperform the benchmark indices. Look for fundamental stocks in this space to take positions.
