It was a shortened week at the bourses with Monday being a trading holiday. Markets gained on three of the four trading sessions and lost on one. Sharp gains were registered on Wednesday and were followed up with a strong opening day of December series as well on Friday. The exit polls for the five states where elections were held indicate a close race but it appears there is change in the air. On balance the ruling party at the centre is likely to be an overall gainer post the results. This enthused the market and the strong rally in Dow too helped matters. At the end of it all, BSESENSEX gained 1,511.15 points or 2.29% to close at 67,481.19 points while NIFTY gained 473.20 points or 2.39% to close at 20,267.90 points. The broader markets saw BSE100, BSE200 and BSE500 gain 2.51%, 2.68% and 2.64% respectively. BSEMIDCAP gained 2.90% while BSESMALLCAP was up 1.91%. The rally was widespread and there were no sectoral losers.
The Indian Rupee gained 8 paisa or 0.10% to close at Rs 83.29 to the US Dollar. Dow had a great week and is now trading at a 52week high. Dow gained on the last four days consecutively and lost on the opening day of the week. Dow gained 855.35 points or 2.42% to close at 36,245.50 points.
The week saw November futures expire on a positive note. The series gain was a big 1,275.90 points or 6.77% at 20,133.15 points. The first day of trading in the new series saw NIFTY gaining a further 134 points.
The week gone by was all about new listings where we saw five main board listings in three days. The participation in four of the five issues was excellent and the shares performed well, beating the street’s expectations in terms of gains and appreciation.
The first to list was IREDA which had issued shares at Rs 32. The opening price or discovered price was Rs 50 and the closing price was the upper circuit at Rs 59.99 on BSE and Rs 60 at NSE. The share gained Rs 27.99 or 87.50%. By the end of the week, the share had gained further and closed at Rs 62.75, a gain of Rs 30.75 or 96.09%.
The second share to list was Tata Technologies Limited which had issued shares at Rs 500. The discovered price was Rs 1,199.95 and the high on listing day was Rs 1,400. The share closed day one at Rs 1,314.25, a gain of Rs 814.25 or 162.85%. There was profit booking on Friday and the share closed at Rs 1,220.20, a gain of Rs 720.20 or 144.04%.
The third share to list was Gandhar Oil Refinery (India) Limited which had issued shares at Rs 169. The discovered price was Rs 295.40 and the closing price on day one was Rs 301.50, a gain of Rs 132.50 or 78.40%. The share lost ground on Friday and closed at Rs 280.35, a gain of Rs 111.35 or 65.89%.
The fourth share to list was from Fedbank Financial Services Limited which had issued shares at Rs 140. The discovered price was Rs 137.75 and the closing price was Rs 140, unchanged to the issue price. On Friday, the share gained marginally to close at Rs 142.50, a gain of Rs 2.50 or 1.79%.
The fifth and final share to list was Flair Writing Industries Limited which had issued shares at Rs 304. The discovered price was Rs 503 and the closing price was Rs 452.70, a gain of Rs 148.70 or 48.91%. Incidentally, the share closed day one at the lower circuit of 10% after a strong showing. Why such a poor performance is something which needs to be looked into. Further the lower circuit happened within 5 minutes of trading post price discovery.
The five listings during the week show the increased power that retail investors have and the number of applications that they have made in these issues. There also seems to be better awareness amongst them that they did not wholeheartedly subscribe to the FedFina issue as the same looked expensive. This awareness is good but the price that they have paid during trading post listing, shows the euphoria that markets are in and retail investors have joined the band wagon. HNIs or high net worth investors overall numbers have increased which indicates that markets have seen new investors joining the investor pool. While this is good and welcome, there must be sanity and valuations need to remain reasonable.
The listing week euphoria will subside and values find realistic levels sooner than later. Incidentally the institutional support which new listings normally find is also currently missing in these five listings.
In economic data, GST collections for November 23 have come at 1.68 lac crs which is a 15% growth on a Y-O-Y basis. This augurs well for the economy and we are on track to cross 18 lac crs from GST on an annual basis going forward. Maybe even 19.5-20 lacs could happen. Even the GDP numbers were positive and came at 7.6% for the July-September quarter, beating RBI’s estimate of 6.5%. These factors and the strong showing in the US markets coupled with political enthusiasm pushed our markets to new highs.
Coming to the markets in the week ahead, the results for the four state elections are out and it’s been thumping victories for the BJP in Rajasthan, MP and Chhattisgarh. Congress has won Telangana as a consolation. The victory also comes as anti-incumbency for BRS which was ruling for 2 terms and the inception or formation of the state. Questions would now be raised on the opposition bloc I.N.D.I.A. which sees Congress getting weakened and state leaders becoming unwilling to operate under the leadership of Congress and its leader.
There would be continuation of the momentum that is being witnessed in the markets in the week ahead. NIFTY has made new lifetime highs on intraday and closing basis and the BSESENSEX is not far behind. Expect BSESENSEX to do that on Monday. With new highs, expect the markets to open up new levels of a minimum 3% from the previous highs. Approximately 600 points on NIFTY and about 1,800 points on BSESENSEX is what we should be looking at.
NIFTY is at a new high and there is a 3% push from the previous high which is taken as a normal jump. The previous high was at 20,222.45 points and Gift City NIFTY indicates that we are at 20,638 points, a gain of 370 points. This leaves little or no room in the 3% band for NIFTY spoken of earlier in this article. Does that indicate there is more room for the indices to move up? Looks likely as we get closer to the general elections in April-May24. Expect markets to show a strong upward momentum even as the economy shows growth in GDP, GST collections and inflation fairly under control. On technical, by and large FPIs are net short in the market and we all know what a sharp rebound can do to the markets.
Coming to the markets, first target for NIFTY 20,850-20900 corresponding to 69,250-69,400 points on BSESENSEX. On a broader range thereafter targets of another 5-7% higher, over the next 4-6 months pre-election are on the cards. On the downside, solid support exists at around 20,000 points on NIFTY and 66,700 on BSESENSEX. The strategy would be to ride the rally and enjoy the feeling with markets at new highs.
Trade cautiously.
